In an attempt to slash tax bills, many employers give employees a cash amount to pay for a car themselves, but Russell Brown at Manchester law firm Glaisyers, warns proposals for corporate manslaughter legislation could complicate matters:
"Cash allowance schemes often lack the necessary controls to ensure cars used for business trips are properly maintained or insured or even the best vehicle for the job," says Brown.
"Company directors could end up on trial for serious accidents involving their employees driving on company business. 'Cash for car' allowances assume that employees will pick the right vehicle and make sure it's maintained and insured."
Under proposed Government legislation, employers' liability will be extended to include manslaughter charges if deaths are caused by 'management failure'. In the case of accidents involving company cars, this will include cars found not to be 'fit for purpose', poorly maintained or inadequately insured.
"Companies already go some way to protecting themselves by having internal systems in place to check insurance and MOT records but this kind of due diligence may not be enough for the new legislation. These proposals present huge risks and employers should monitor developments closely," added Brown.