BiK overspend of £2m
New research has found that 75% of dealers overpay Benefit in Kind (BiK) to company car drivers, equating to more than £2m.
After producing the first audit of its kind on HMRC’s Averaging Agreement for company car drivers, Cooper Solutions is calling for HMRC to introduce fairer methods of taxation.
The Averaging Agreement scheme was officially introduced in 2009, but hasn’t been reviewed since then.
Dean Pipitone, director of Cooper Solutions, said, ‘When the Averaging Agreement was first introduced, it seemed like a reasonable solution for franchised dealers. They would simply need to calculate the average vehicle BIK per price band and allocate employees to a band. However, eight years on and we can see that whilst most franchised dealerships try to comply with the Agreement, due to the demand placed on dealership vehicles, overpayment of tax is the reality.’
He continued, ‘Due to customer demonstrations, courtesy loans or other business factors, employees can only take home the car that is made available to them each night. This equates to more than £2 million worth of BIK overpayments made by employees. For employers, this means they paid more than necessary on National Insurance Contributions and VAT.
‘We are campaigning on behalf of the industry to see a formal review by HMRC of the shortcomings of the Averaging Agreement, and call upon it to consider how technology solutions that record, in real time, the actual use of vehicles based on availability, can produce a fairer means of taxing employees and their employers.’
