a grip 
on getting about

These days, most businesses need to move people or product around and require a vehicle and driver to do so. The ramifications in terms of performance and cost, coupled with the potential risks which could be encountered mean that decision making about how business travel requirements are fulfilled is a critical function of management. Even in quite significant organisations, decisions have been based on bad data; solutions initially deemed so appropriate, later transpire to present far greater costs than had ever been anticipated and, moreover, diverting away from the plan consumes a massive amount of resource.

Know your business
It’s vital to have a thorough understanding of the business, the operations and the current transport needs as well as a sound appreciation of what is likely to happen over the next two or three years and the corporate social responsibility perspective of the organisation. Clarity around these aspects will support the process of establishing the objectives for any provision of business transport.
However the car is provided, as soon as the organisation has any employee driving on business, there are legal obligations which have to be addressed. Contrary to some belief, they are no less significant when an employee uses their own car for business purposes; in fact, they are likely to be more difficult to manage than if the organisation provides the vehicle. There is an element of ‘lightning strike’ about this; the chance of it all going badly wrong is statistically low but the impact if it does will be massive. The organisation must take reasonable steps to ensure that risks associated with the driver, vehicle and journey are identified and suitably managed through policies, procedures and processes.

Grey Fleet
The most obvious first port of call for a vehicle for business use is getting employees to use their own cars. What sounds so gloriously simple is, of course, nothing of the sort.
The organisation will need to ensure
that the driver is competent to drive for business. Holding a valid driving licence may well indicate some capability but a poor accident history, habitual poor driving practices, a willingness to bend the rules and perhaps even personal health issues indicate potential issues. The organisation needs to put in place procedures to control this exposure and the controls need to be in place for everyone driving on business.
The next area of concern is the vehicle itself; it needs to be suitable for the business purpose and must be on the road legally by having an MOT certificate as required and with business use insurance which covers that employee driving in connection with the organisation’s business. It must be in good condition in all respects; properly maintained and with routine safety checks carried out by the driver.

Other concerns
Using employees own vehicles is an onerous business; the younger driver with
a hot-hatch, which he perhaps can’t afford to maintain fully, is a fairly obvious problem area but there are many more potential issues which are far more subtle. Even if the employer can put in place adequate controls to manage the driver and vehicle risk and apply some control to authorise each use, there remains the issue of how employees are to be reimbursed for the business use. Very popular is the AMAP rate (Approved Mileage Allowance Payment), currently 45 pence per mile for the first 10,000 miles and 25 pence per mile thereafter. The great attraction of this rate is that there are no taxation or national insurance liabilities so it’s nice and straightforward. However, it’s a compromise, for some situations it might be too little and for others, too much. Expect to spend a great deal of time defending the rates used and, when this is considered alongside all the issues around the driver and the vehicle, it’s little wonder that many employers have put this solution into the ‘too difficult box’ and shifted to pool cars.

Pool Cars
Plenty of organisations use pool cars effectively. They are not assigned to an employee and not available for private use and therefore there is no benefit in kind taxation (BIK) or national insurance (NI) liability.

However, they must truly be pool cars and that means that they have to be made available to, and used by more than one employee in the tax year, they shouldn’t be used by one employee to the exclusion of others, any private mileage should be incidental to the business use and the car shouldn’t be normally parked at or in the vicinity of the home of any particular employee. The common query is that of the early start and a wish to take the car home the night before. If this is occasional and infrequent, it’s unlikely to be a problem but, should a pattern of this sort of use become established, it will doubtless present an issue.
One concern is maintaining the ‘quality of use’. Providing a pool car for a 100-mile trip to visit a customer is fair enough and releasing a car that is otherwise doing nothing to drive to the local bank or Post Office is probably quite reasonable. The difficulty arises when cars are being pre-booked to undertake those petty local jobs and preventing the cars from being used for higher quality purposes. I came across a business where several pool cars were taken, every day, to drive to the local city, where they would be parked for six or seven hours, despite the fact that there was a chauffeur car on a city shuttle throughout business hours.
However, there are benefits – you can be assured that the vehicles are suitable for business use, are being maintained properly and that they are taxed and insured.
Abuse however is a common problem. A robust process for both the issue and return of the vehicle to ensure that vehicle condition is maintained is vital; this is very time consuming and arduous and there are often issues in getting it done consistently, particularly when other business pressures come into play. The amount of resource necessary to maintain adequate levels of control is almost always underestimated.

Short-Term Rental
Some organisations use short-term rental as a method of delivering pool cars and if the vehicle is a true pool car as outlined above, then again there is no BIK taxation or NI liability. Where rental is used to provide pool cars, the user outsources the condition management and the handover process. However, the costs of the additional administration will have to be recovered. Consequently, if the organisation requires lots of vehicle handovers, then there will be a higher level of administration from the rental provider, for which they must apply charges.
However, the organisation will be able to access robust information to identify those drivers who perhaps need to be the focus of management attention to correct performance deficiencies.

The other application of short-term rental is to provide more permanent cars to accommodate longer assignments, the engineer who needs to be away for several months on an installation or the new starter who is eligible for a company car but where the employer would like to ensure he’s settled in before making the commitment to a new car. Where the car is allocated to an employee in this fashion there will be a BIK liability for the driver and a NI liability for the employer. These will be based on a scale which reflects the list price and CO2 emissions of the car.

Full Company Car
Company cars are usually provided to employees who need them for their role or who are entitled to them by virtue of their status. The specific objectives of the organisation will influence the general level of car and the extent of choice offered to the driver; where the car is provided purely for business travel needs, there might be little driver choice. However, where the scheme is about attraction and retention of staff, choice might be much wider. Choice does however bring its own issues, a common one being the re-allocation of released vehicles, particularly in an era where drivers will be paying BIK tax (and the organisation NI) and often have clear ideas about the car they’d prefer.
Most organisations acquire their cars either by ownership or contract hire. Any new car has to be seen as a three or four-year commitment; this means that great care should be taken in getting structure and control into the scheme. This will ensure that appropriate cars are brought into the fleet, adequate levels of control are applied, costs can be forecast and performance maintained.
Common issues include establishing and maintaining eligibility criteria, managing vehicle choice over the longer time as prices, costs and CO2 emission-based BIK tax band levels move, influencing driver behaviour and managing risk.
Above all, the business, the fleet, the industry will evolve and it’s vital that, irrespective of how cars for business are provided, information is gathered and reviewed on a regular basis to refine the policy and to perhaps identify changes in how transport ought best to be provided for the different usage profile groups.

Further information

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