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HMRC on the prowl as dealers and staff sidestep tax on demonstrator fleets

Dealers are risking fines and prosecution from the HMRC for failing to audit and maintain proper records of staff using demonstrator and courtesy cars.

Spot research by automotive software developer, DCML, found that 30% of dealers questioned have a robust compliance “paper trail” relating to car usage and benefit-in-kind calculations.

In February, HMRC started naming and shaming deliberate defaulters as part of its clampdown on ‘less clear cut tax avoidance issues’.

The list – which has included hairdressers, coach operators and grocers so far – is now being published quarterly.

Despite a near 40% increase in compliance investigations by HMRC during the 2011-12 tax year, which resulted in an additional £434m in tax collections and fines, the majority of the 46 dealer businesses surveyed by DCML admitted they were ‘turning a blind eye’ to the issue.

Based on DCML’s experience of dealership processes, it is clear that a significant proportion of demonstrator and courtesy car fleet usage is non-commercial.

Vince Powell, managing director of DCML, said: “It has always been seen as a perk for dealership staff.

“Unfortunately, the tradition has been flying in the face of the authorities for years and the risks to the business and individual for non-compliance are only going to intensify.”

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