Company car drivers could face demands for back tax from HM Revenue and Customs, as a result of complexities of the Operational Remuneration Arrangements (OpRA) rules introduced this April.

Lisa Temperton, Activa Contracts

Speaking at the Fleet Industry Advisory Group’s autumn workshop, Lisa Temperton, sales and marketing director at Activa Contracts warned that P46 (Car) forms for the 2017/18 tax year may be incorrect as a result of payroll departments not being set up to handle the changes.

Announced during last year’s Autumn Budget and the subsequent Finance Bill, the new rules affect employees opting for salary sacrifice or taxing a company car in lieu of a cash alternative. It means they are liable for whichever is the higher figure, either the company car benefit value and salary sacrificed, or the cash allowance given up.

Arrangements put in place before the rules came into force on the 6th April 2017 are protected for four years, and Ultra-Low Emission Vehicles (ULEVs) are exempt.

Temperton said this had caused huge complexity for businesses; it was recently revealed that the salary sacrificed only includes the car itself, while costs such as maintenance, insurance, tyres, breakdown and recovery are not part of the calculation.

“Some employees will have underpaid tax and that will cause pain as HMRC looks to recoup the tax they believe due,” said Ms Temperton.