Employment Tax Expert

I like many people had hoped that our taxation system would be made simpler but no it seems like one more administrative burden after another. An example for you with something as seemingly innocuous as a change in the Advisory Fuel Rates. These are rates published by HMRC for use by employers who either reimburse the cost of business fuel to their company car drivers or where both business and private fuel is initially paid for by the employer, usually when a fuel card is used, the employee to avoid a company car fuel scale charge reimburses their employer the cost of private fuel.

The latter option is always the most dangerous because any amount of private fuel not reimbursed leads to a fuel scale charge, which is a hefty benefit in kind that HMRC will pursue the EMPLOYER for, together with Class 1A NIC – imagine that cost if you’ve been getting it wrong for a few years!

So most employers pay AFR’s which used to be reasonably straightforward before we had the massive increases in the cost of petrol and diesel. Now employers face the constant “discussions” with their employees over what rate they should receive, as prices fluctuate. HMRC like the teflon kid (non stick if you’re feeling a bit slow this morning) simply point to the fact that they are only “Advisory” rates and that employers can pay higher rates if they can prove that they are justified – more admin v disgruntled employees

So what has now happened – well previously HMRC would give a month’s notice of a change in the rates, so allowing employers sufficient time to change their systems. Not now this one month’s grace has been removed and if you didn’t pick it up the new rates were announced on Friday, so for most employers that would have actually meant this morning, 30 November with the rate change from 1 December ie tomorrow – madness!

It’s like a game where the rules keep changing and if you get it wrong there’s penalties etc accumulating.

If the rates go up and you don’t spot the changes then you may be paying less than you can – I’m sure those employees will be telling you and you will need to make (if you want) a correction – more admin! but the contra side of this is that if employees have to reimburse you then you will have problems because they won’t be reimbursing enough and oh what joy from HMRC – private fuel scale charge

What happens if you only pay business mileage and the rates go down and you don’t spot them – feel the pain

This is just another trap that unsuspecting employers can and will fall into and wait for your next employer compliance review, tax investigation – this employment tax expert bets that this is an area where there will be a heightened level of interest – so be warned!

Yes that’s right – in this era of doom and gloom both employers and employees can save a lot of money and not be tied to ever increasing car benefit and car fuel benefit charges simply by looking at how they provide cars to their employees. Don’t get confused with ever increasing taxation on these benefits, in the name of “going green/saving the planet, enviromentally friendly” it’s all crap – we’ve a national debt to feed and it’s got a monstrous appetite – remember this when it comes to the Pre Budget report.

So remove yourselves from this farce, it’s a fantastic idea, tailored specifically to your company and with HMRC approval, employees love it and even better you as the employer keep control and meet your duty of care and corporate manslaughter responsibilities.

Not come across it before? Thought about it some years ago but were a bit afraid of it – well those employers that weren’t have saved £millions – now don’t tell me that you wouldn’t be interested in that. So if you have a company car fleet or are even running a cash for car scheme and want to join the band of smiling employers and employees and find out more about employee car ownership schemes then call us on 0800 917 9176

As you may or may not be aware there are a number of creative car scheme options in the market place. However, and this is a really serious warning – you need something that is bespoke to your company, fits in with your culture and most of all is communicated effectively. At EICG we do a number of options like employee car ownership schemes but what we do is to sit down with the employer and work through exactly what they are trying to achieve, we keep it as simple as possible so that it is easy to understand, unlike a scheme that was brought to me for review recently.

Reading the literature – it was badly designed, simply did not work from a technical perspective and even worse it shafted the employees. Combine this with the fact that no one at the company seemed to understand it and you wonder what this employer was thinking. Well it’s easy for an SME to get it wrong you may think but this was an international PLC. The whole way this proposed scheme has been developed and communicated is laughable if it wasn’t so serious – the employees are not thick they have asked very real questions and have got absolutely crap in response so now you have a complete air of mistrust that has been brought about because of a combination of greed from the employer and appalling communication of a scheme that should never have raised its ugly head.

At EICG we pride ourselves on the fact that both the employer AND the employees are happy with the arrangements because we go through things warts and all, asking questions, posing scenario’s so that the employer has thought through all eventualities and it is only when this process has been completed do we then communicate the scheme to the employees – face to face in non tax language so they can ask all the questions they want.

So whatever you do – believe that you can change your existing car scheme for the benefit of you and your employees but do come to a reputable service provider like EICG and we will walk you through it

If you either have company cars or a car allowance scheme have you considered what savings you could make by moving to an employee car ownership scheme?

Could your business do with making excellent savings as well as motivating your staff in difficult times then this is what you should be looking at. For all of you out there with car/cash allowance schemes are you meeting your duty of care and corporate manslaughter responsibilities as you have what is termed a grey fleet? ECOS meets all these requirements as it is a structured scheme – so what have you got to lose – have a chat, with the employment tax expert and see what it can do for your business