The Chartered Institute of Taxation (CIOT) welcomes HM Revenue & Customs’ decision to give businesses a one-month transitional period to deal with the reduction in advisory fuel rates for company cars. The changes came into effect from 1 February 2007. John Cullinane, CIOT President, says: “We felt that the timescale provided insufficient notice for many employers to implement the change. We are very pleased that HMRC listened to our representations and those of the Institute of Payroll Professionals, and responded swiftly in order to help alleviate the business burden.”
Under the change employers who have practical difficulties implementing the new lower rates can continue to use the older higher rates for a further month without having to take into account the income tax, NIC and VAT implications of paying allowances at the higher rate.
John Cullinane adds: “It is important to minimise the administrative burden on business, particularly small and medium-sized companies, as they do not always have the resources to implement changes as swiftly as HMRC require.”
Without HMRC swiftly agreeing to this transitional period, employers who continued to use the old higher rates during February would have been subject to the burdens of sorting out the income tax, National Insurance and VAT implications involved in paying excess rates.
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For press information contact Simon Goldie on 020 7245 4122 (direct line - 24 hours). Email sgoldie@ciot.org.uk
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Simon Goldie
