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Daily News Round upBack

Supreme Court says Pendragon’s dealerships accountable after finding demonstrator VAT scheme was “abusive” of the law

new cras

The UK’s Supreme Court has ruled that a KPMG scheme to enable dealer group Pendragon to recover VAT on demonstrator cars sold as used cars was “abusive” of the law.

Its decision earlier this month has overturned a previous Court of Appeal ruling on the scheme, which Pendragon used on two occasions in 2000 and 2001.

Normally when a dealer group buys new cars for use as demonstrators it will pay VAT on the full sale price and then recover the input tax.

The scheme, devised by KPMG, exploited three exceptions to the normal incidence of VAT so that Pendragon would only have to account for VAT in respect of the difference between the wholesale purchase price and the retail sale price of its demonstrator cars.

Under the scheme, Pendragon bought cars from a wholesaler then sold them to four captive leasing companies which immediately leased the cars to Pendragon dealerships and then assigned the leases and their title in the cars to an offshore bank.

Some 30 to 45 days later the offshore bank transferred as a going concern the lease agreements and title in the cars to Captive Co 5. The demonstrator cars were sold to customers by the dealerships, acting as agents for Captive Co 5.

Customers paid VAT only on Captive Co 5’s profit on the sale, rather than on the total sale price, under the ‘profit margin’ scheme, which is available under UK law where goods are acquired as part of a business transferred as a going concern.

HMRC accepted that the scheme technically worked, as the conditions for exemption from VAT and for the margin scheme were satisfied. However, it argued that the scheme breached the EU legal principle of abuse of law and so the VAT advantages could be denied.

Giving the leading judgment in the Supreme Court, Lord Sumption said the KPMG scheme was abusive as “a system designed to prevent double taxation on the consideration for goods has been exploited so as to prevent any taxation on the consideration at all.”

Lord Sumption said that the application of the abuse of law principle to tax avoidance schemes “calls for a difficult balance to be drawn” as schemes are rarely directed exclusively to tax avoidance and generally have some concurrent commercial purpose. The judge said the steps taken by the scheme were “manifestly included” not for the purpose of facilitating the obtaining of credit from the offshore bank “but for the sole purpose of legally recharacterising a transfer of cars without incurring net liability on the price”.

The Court said that the transactions should be redefined by stripping out the five captive companies, so that the dealerships would be accountable for VAT on the full second-hand price of the cars.

Darren Mellor Clark, a VAT expert at law firm Pinsent Masons, said: “This case appears to constitute further indication that, in tax, there is the same dynamic of inherent obsolescence as is to be found in technology and the proponents of Moore’s Law.

“The scheme relates to transactions conducted in 2000 and 2001 and then evaluates those via the considerations and context of 2015. It appears that ‘old technology’ is unlikely to be acceptable to today’s Supreme Court.

“Their Lordships appear to caution users of arrangements with legitimate commercial purpose if that purpose supports accrual of a tax advantage as its key aim.”

Source: am-online.com

Zero emission engines begin full testing at dedicated liquid air R&D facility

Dearman, the clean cold technology company, has announced that full testing of its zero emission engine technology has begun at its new liquid air R&D facility.

The Dearman Technology Centre, located near Croydon, is the first dedicated liquid air engine facility of its kind. It houses a range of custom-built test cells, in which Dearman’s technologies will undergo extended durability testing and new applications will be developed.

When fully operational, the centre will enable the testing of four engines simultaneously, along with full system testing, supported by low-volume manufacturing and build capabilities.

Source: fleetnews.co.uk

Air quality will be a ‘game changer’ for EV uptake

Air quality issues across Europe will prove to be a game-changer for electric vehicles (EVs), according to Nissan.

Governments are looking at how they can mitigate the harmful effects of exhaust emissions, which include nitrogen oxide (NOx) and particulate matter (PM10).

In the UK, London will launch the world’s first ultra-low emission zone (ULEZ) in 2020, requiring vehicles travelling in the congestion zone to meet new emission standards or pay a daily charge.

And, with other cities expected to follow London’s lead, Nissan EV director, Jean-Pierre Diernaz told Fleet News it will help drive the uptake of plug-in vehicles.

“Every single city is looking at something, whether now or in the near future, in terms of ultra-low emission zones,” he said. “This will be a massive problem for companies making deliveries in these cities and their solution will be e-mobility.”

Diernaz also argues that the potential impact on an individual’s health, rather than established concerns over global warming, will persuade more people and businesses to consider EVs.

Source: fleetnews.co.uk

Ex-minister warns of salary sacrifice rule change

A former pensions minister claims the Government could target salary sacrifice in an effort to claw back lost tax revenues.

Millions of employees choose to sacrifice part of their gross salary in exchange for a wide range of services and goods, including pensions, childcare vouchers, bikes and cars.

However, Steve Webb has warned that the Conservative Government may be tempted to look at recouping some of the £15 billion avoided in national insurance contributions (NIC) in its first budget.

Chancellor George Osborne will reveal the Government’s tax and spending plans in his budget on July 8, but has already ruled out increases to income tax, NIC or VAT.

“One thing you might do is say ‘salary sacrifice costs us NIC revenues, so we’re going to do something’,” said Webb.

The former Liberal Democrat MP, who lost his seat at the last election, told Workplace Savings and Benefits that the benefit will be on the Government’s radar.

“If the squirrels at the Treasury are not eagerly working on that subject I would be very surprised,” he added.

However, the UK’s biggest provider of salary sacrifice for cars doesn’t believe the Government will change the rules.

“What he’s talking about is salary sacrifice,” said Tusker CEO, David Hosking. “Salary sacrifice is very different from the car version and the reason it’s very different is if you sacrifice your salary for childcare or bikes you don’t get taxed on the benefit you receive, whereas if you salary sacrifice on cars it’s no different to a company car where you pay benefit-in-kind tax.”

A report from PricewaterhouseCoopers (PwC), commissioned by Tusker, argues thatcar schemes provide a net financial benefit to HM Treasury.

Source: fleetnews.co.uk

Dealers urged to display cost per month finance online

Most car dealers are failing to promote monthly finance costs on their websites even though this is increasingly the preferred buying criteria for buyers, according to Auto Trader.

New research conducted by Auto Trader found that only 15% of dealer websites currently present finance options, although 45% of dealers said they intend to do so.

“The upsurge in PCP agreements in both the new and used car finance markets is making the list price of cars increasingly irrelevant. With 77% of consumer new cars and around 25% of consumer used cars currently sold on dealer finance, monthly payments have become the benchmark information for consumers on affordability,” said Paul Harrison, Auto Trader’s head of motor finance.

Auto Trader also found that 92% of consumers have already decided their payment method before visiting a dealer’s showroom.

“Given how consumer behaviour is changing – and the tendency of buyers to make all their big decisions while researching online – open and transparent information on car finance will offer dealers a real competitive advantage and ensure consumers properly consider dealer finance versus alternative sources.”

Auto Trader’s research also found that 86% of consumers carry out their research online after 6pm, when showrooms are closed, with over half arriving on a forecourt without making any prior contact with a dealer.

Source: motortrader.com

Hyundai reveals Tuscon pricing

Hyundai has confirmed its Tuscson will be priced from £18,695 when it goes on sale in September.

The vehicle is powered by three engines – a 1.6-litre petrol which is offered in 132hp and 177hp formats, a 1.7-litre 116hp diesel and a 2.0-litre diesel with either 136hp or 185hp.

The most frugal models in the range are powered by the 1.7-litre diesel and emit 119g/km of CO2. Prices start from £20,195 for the model in the S trim level.

Five trim levels – S, SE, SE Nav, Premium and Premium SE – are offered. Standard equipment includes DAB radio with MP3 connectivity, Bluetooth, USB and Aux connections and automatic headlights with dusk sensors.

SE-line models add 17-inch alloy wheels, rear parking sensors, heated front seats, a lane keeping assist feature and dual zone climate control, while SE Nav models get an eight-inch touchscreen and the firm’s Speed Limit Information System, which uses the car’s front camera and information from the navigation unit to identify road signs and display the speed limit in real time.

Premium models include 19-inch alloy wheels, leather upholstery, parking sensors, an autonomous emergency braking system, blind spot detection and heated rear seats, while the range-topping Premium SE model features keyless entry, Hyundai’s Smart Parking Assist System, an electric tailgate, LED headlights and a panoramic sunroof.

“The outgoing model, the ix35, is our second best-seller in the UK so far this year which just proves how critical this sector is for our brand – the Tucson will look to develop this success, thanks to its striking design and the enhanced level of technology and equipment it offers our customers,” said Tony Whitehorn, president of Hyundai UK.

Source: businesscar.co.uk

Garage dialogue with suppliers puts end to “price” concerns

The price of automotive components is less of an issue than ever before for garages buying from motor factors, according to a survey conducted by WAIglobal UK.

In a survey of AutoCare garages at the recent AutoCare show, held in Milton Keynes, garages said that “relationship”, “availability” and “customer / technical support” were their top three buying criteria, with “price” not only a distant fourth but hardly even mentioned.

Kevin Sharp, Sales and Marketing Director WAIglobal UK Ltd, said: “This is the third year in a row that “price” has not come in to the top three ‘buying criteria’ for AutoCare garages. While it should not be overlooked, it should actually serve as a warning to all in the supply chain, not to underestimate all the other more important requirements of its garage partner.”

Sharp added that the survey further confirmed the belief that the perceived cheap “prices” are being used as a tool to compensate for all the other shortcomings in the supply chain. “It is the belief of many in our trade that if all else fails a cheap price will suffice,” he said.

During many trade events and independent garage workouts, WAIglobal UK has identified that garages are feeling increasingly dis-engaged from their chosen supply partner. “It is important that both motor factors and suppliers recognise and understand what is needed to help drive a garage business forward. Being the cheapest is not fulfilling the garage’s requirements,” said Sharp.

The survey findings also underline WAIglobal UK’s mission over the past three years, which has been to place customer support, service and training packages at the top of its priority list, thus cementing long term relationships between supplier, motor factor and garage.

“WAIglobal UK, due to its truly global manufacturing facilities, can supply parts at market competitive prices, not to be confused with “cheapest”. But, it can also give the whole supply chain added value and margin potential by supporting the cradle to grave concept with customer support and training,” said Sharp.

Source: pmmonline.co.uk

MITSUBISHI OUTLANDER ON TOP AS ELECTRIC CAR SALES SURGE

Heightened by Government grants, the number of ultra-low emission plug-in vehicles in the UK has more than tripled over the past year.

According to the RAC Foundation, at the end of the first quarter there were 29,469 vehicles on the road in the UK that were eligible for grants, a rise of 37 per cent on the final quarter of last year and three times the number on Britain’s roads at the start of 2014.

Under existing schemes, buyers of plug-in hybrid cars and vans are eligible for a £5,000 and £8,000 grant respectively. Although the pace of increase is impressive, motoring groups are concerned this will slow should grants be withdrawn from plug-in vehicles.

‘For the time being that is still dependent on a government grant,’ said Steve Gooding, director of the RAC Foundation. ‘The challenge for manufacturers will be to offer economically attractive options when the grants get reined in.’

Electric vehicles are increasingly being viewed as the future of motoring as more manufacturers develop plug-in hybrid technologies that allow drivers to recharge their cars quicker and travel further. However, limited range and the cost of sophisticated batteries remain a hurdle that the industry must work to overcome.

Out of the 30.7m cars and 3.6m vans licensed in the UK, plug-ins only account for 0.09 per cent, or one in every 1,164 vehicles on the roads.

From a list of top 20 models compiled by the RAC Foundation, the Mitsubishi Outlander plug-in hybrid has emerged as the best-selling, with 9,688 rolling off the forecourts in the first quarter, compared to 5,273 cars in the final three months of last year. The Mitsubishi was followed by the Nissan Leaf and BMW i3. Tesla, came in seventh in the RAC Foundation survey.

Source: bodyshopmag.com

RIVAL SELF-DRIVING CARS SUFFER NEAR-MISS

A rare meeting between rival self-driving cars on a Californian road almost ended in a crash, Reuters reports.

The robot cars, one made by Delphi Automotive and the other by Google, had their encounter on a busy road in Palo Alto.

The Google car reportedly pulled out in front of the Delphi vehicle. The abrupt action forcing it to abandon a lane change.

Neither car sustained any damage in the near miss.

The incident comes as Google’s purpose-built self-driving cars take to California highways to see how well they do when they mix with vehicles driven by humans.

Details of the incident were revealed by John Absmeier – director of Delphi’s autonomous car driving unit.

The vehicles involved were conventional road cars modified with lasers, radar, cameras and other sensors to help them navigate roads without a driver.

The incident occurred as the Delphi car, an Audi Q5, was preparing to change lanes. As it did so the Google car, a Lexus RX400h, abruptly moved in front of it forcing the Audi to abandon its manoeuvre.

The Delphi car coped well with the incident, said Mr Absmeier, and ‘took appropriate action’.

Google declined to comment on the near miss or the behaviour of its car.

Google and Delphi’s autonomous vehicles have been involved in several minor accidents and incidents during testing. However, before now all of those have involved the robot cars and human-driven vehicles. In almost all cases, the firms have said, the fault lay with human drivers.

Source: bodyshopmag.com

BODYSHOP/IAEA VDA OF THE YEAR AWARDS 2015

Yesterday (25 June) bodyshop magazine travelled to the Thatcham Research centre, to check out the competition at the final of bodyshop/IAEA Vehicle Damage Assessor of the year awards.

The competition had been narrowed to down to just six competitors after they managed to get through the initial qualifying stages. The first stage involved a multiple choice test, entrants were required to answer 30 questions in 20 minutes. The top 12 competitors with the highest score from this round then had to take part in a telephone interview with former president of the IAEA, Trevor Sutton and his esteemed colleague Geoff Stagg. This lasted approximately one hour and the top six scorers of the phone interview where then invited to Thatcham where the practical exam took place.

The competitors who reached the final six were: Lee Marshall, last year’s winner Karen Ashton, Darren Porter, two time winner Russell Taylor, Terry Brett and Philip Roath.

Source: bodyshopmag.com

FCA’s Jeep delay highlights challenges to a potential merger

The chief of Fiat Chrysler Automobiles’ Jeep brand, Mike Manley, says a redesign of its Grand Cherokee SUV will be delayed by at least a year, intensifying the challenges FCA CEO Sergio Marchionne faces in his quest for a partner.

Manley confirmed FCA’s decision to push back the launch of a redesigned Grand Cherokee to late 2018 or to 2019 from late 2017. That delay is one of at least a dozen relating to current or new vehicles in North America.

FCA said the delays are not related to a shortage of money, but dealers could still wait longer for vehicles with fresh designs and technology at a time when rivals plan to launch new models at a faster pace, according to a Bank of America report which noted that the market share gains FCA has targeted “appear unlikely.”

FCA’s ability to keep up in an intensifying auto technology race is a critical question for potential merger partners, analysts and industry executives said.

Marchionne has reached out to General Motors CEO Mary Barra, proposing a merger. But Barra rebuffed him, saying earlier this month that GM could do better by “merging with ourselves” to improve economies of scale, respond to tougher fuel economy standards and meet consumer demand for digital connectivity and advanced safety features.

FCA would bring to any merger a U.S. model lineup that ranks last in fuel economy among major automakers, performs poorly in measures of quality, and has a higher than average dependence on consumers who rely on subprime loans, according to non-public data compiled by J.D. Power and reviewed by Reuters.

FCA’s Chrysler brand sold 26 percent of its vehicles using subprime financing. The industry average is 12.7 percent sales to subprime borrowers. FCA’s Jeep and Ram brands are both below that level.

FCA spent 1.5 percent of its annual revenue on research and development last year, compared with 4.8 percent for Ford Motor and 4.7 percent for GM, according to non-public data shown to Reuters by a source on condition of anonymity.

The automaker’s North American profit margins last year were 4 percent, roughly half of those reported by GM and Ford. FCA said it plans to boost North American margins to 5.5 percent to 6 percent this year, still below the levels its Detroit rivals are projecting.

The world’s No. 7 automaker lags its rivals in the race to hit the U.S. fuel economy target of 4.3 liters/100km (54.5 mpg U.S./65.45 mpg UK) by 2025. In 2014, FCA’s U.S. fleet averaged 11.1 liters/100km (21.1 mpg U.S./25.34 mpg UK), last among major automakers and nearly 8 miles per gallon behind the leading company, Japan’s Mazda Motor Corp.

Gualberto Raineri, FCA’s chief spokesman in North America, said the company has been confounding skeptics since Fiat took over management control of Chrysler in 2009. Paraphrasing the writer Mark Twain Raineri said: “The report of my death was an exaggeration.”

Marchionne has argued that global automakers must consolidate to shoulder the rising costs of investment for new technology. He said Wednesday FCA is making “huge progress,” but that progress “is costing us.”

Source: europe.autonews.com

Posted by Lois Hardy on 29/06/2015