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ECO reforms come under fire

Date: 09 February 2007   |   Author: Nick Gibbs

The Government's attempt to reign in the growing popularity of employee car ownership schemes (ECOs) has been attacked by a leading participant in discussions held with industry figures last month.

Harvey Perkins, senior consultant at KPMG's Carwise, told BusinessCar he was concerned that the proposed reform was being rushed.

"The Government have set themselves a very tight timetable, but they're still asking some very fundamental questions. I'm wondering whether they're regretting asking the question in the first place," he said.

According to figures taken from the Government's company car review in 2006, some 150,000 employees have cars provided by tax-efficient ECOs. The report also stated that cars provided by ECO schemes emitted 20g/km more CO2 than those run under the company car scheme.

"We can't support that number," said Perkins. "In lots of cases - the ECO scheme produces lower CO2.

"One of the biggest costs is fuel. If a company is planning a scheme, they're doing it to minimise costs."

In setting up the discussions for reforming ECOs, HMRC stated that they "will use the information to consider the argument for and against taxing the advantage that an employee or employer derives from ECOs".

Any change is expected to happen as early as April this year. "I don't believe that's enough time," said Perkins.