THE MINEFIELD FACING FLEET MANAGERS

Fleet managers are facing a minefield when it comes to health and safety issues, market changes and tax increases – and those who are not fully informed could soon find themselves overwhelmed and possibly facing legal action. This is the message from independent chartered accountancy firm Broomfield & Alexander, who has teamed up with Atlantic Vehicle Management, to host a seminar on the subject on Tuesday 25 February at the Holiday Inn, Pentwyn.

Andy Mallett, tax partner at Broomfield & Alexander, said: “With the introduction of taxation for company cars, many companies are now turning to Employee Car Ownership and Cash Opt Out schemes as an alternative. However, there are many factors that need to be taken into consideration and great care must be taken in choosing the correct scheme. Giving staff a cash allowance instead of a company car does not absolve the company from its legislative duties in ensuring the vehicles are maintained to the highest degree.”

Offering the employee loans, cash or sponsored schemes to buy their company cars raises enormous Health and Safety issues, which need to be addressed and for which the company still remains liable. The Management of Health and Safety at Work Regulations 1999 and the Provision of Work Equipment Regulations 1998 states that employers must ensure that their staff receive adequate training to work safely and that the equipment provided for the job is safe. These regulations mean that employers have a duty to make sure that their staff are driving the correct type of vehicle required by their role. Further, the maintenance of the vehicle is of paramount importance. Leading consultants warn that staff who take a cash option should have their cars taken off the road if they fail to maintain the vehicle in line with manufacturers’ specifications.

Alison Holmes from Atlantic Vehicle Management said: “Some Employee Car Ownership schemes can overcome these issues, but it is imperative that your fleet requirements are looked at by an expert before choosing one. Not all employees in a fleet will benefit from a cash opt out arrangement. For example, this would particularly suit high mileage business drivers who qualify for tax free and NI free business mileage reimbursements at a high rate. They are also beneficial for employees that are driving high emission vehicles to avoid the associated benefits in kind tax.”

There are many different products on the market that claim to help fleet managers tailor schemes to their individual needs, but with so many on offer, how do you know which one to choose?

Ideally, you should consult an independent specialist that offers a range of products. The fleet should be analysed in depth and segregated into sets of variables. This work should not be a stand-alone project. You should also employ a specialist tax adviser to verify each situation before a final product proposal is agreed. The final part of the project is often the element that is missed and is where many companies will fall down. It is assumed that all Employee Car Ownership products have been approved by the Inland Revenue, but this is not the case. The entire proposal needs to be submitted to the local Inland Revenue office for approval prior to implementation. This is essential in order to assure all parties that there will be no retrospective penalties for using a product that is not suitable for the fleet in question.

Andy Mallett concluded: “With the move away from traditional contract hire to a driver ownership package in order to neutralise Benefit in Kind taxation, the Health and Safety issues are highlighted still further and a need to remain in control of such issues becomes an enormous task for the fund manager and a huge company liability.”