F&I Management & Training

Motor industry faces surge in red-tape, confusion and extra costs thanks to ill-timed tax changes Motor retailers in the U.K. face a sudden and significant increase in red-tape next month - and the possibility of increased costs - unless proposed changes to the current practice of taxing company cars provided to employees in the industry is deferred, according to international accountancy firm Mazars. Demonstrator cars are commonly used as 'company cars' in the evening and at weekends by employees in the industry. At present, the taxable benefit on these vehicles is calculated based on a typically provided car. The reforms will require the industry to undertake a significant exercise at the beginning of each tax year to determine the taxable benefit on these vehicles grouped according to their list price and CO2 emissions. There are fears that this will lead to significant administration and added costs at a time when the industry is facing significant financial pressure. The proposals could also result in employees having to pay significantly more tax, and confusion over why the changes have occurred. Mazars is concerned that the changes have been poorly communicated and the short notice period is unreasonable given the substantial amount of work the shift will generate. The firm is seeking dialogue with the Treasury following discussions with a number of clients - and through them the representative industry bodies - which highlighted that a substantial proportion of the sector was unaware of the impending reforms. Alastair Kendrick, a director at the firm and a specialist in company car taxation comments: "The changes were only announced on HMRC's website on 30 October last year, without any formal notice sent to manufacturers and dealers. We've met with a number of motor manufacturers and importers, as well as industry bodies, and there is a genuine concern that there has been a lack of proper consultation and impact assessment." He continued: "The suggestion the changes are in response to supposed abuse of the system seems not be substantiated. This current period of unprecedented industrial upheaval will of course magnify the detrimental impact of the proposals."

DATED: 16.03.09

FEED: AW