Revenue response to CO2 car tax story

Dear Sir,

Your recent article entitled ‘Company car system faces chaos’, gives a misleading impression that could worry many of your readers.

I would like to reassure them by explaining the actual situation relating to carbon dioxide data for purposes of the new company car tax. The new system for taxing company cars, which begins on 6 April 2002, will link the tax charge to the car?s CO2 emissions instead of the business mileage.

The level of vehicle CO2 emissions are tested when the manufacturer submits a sample vehicle for type approval testing under rules that are set down for the whole EU. These are the figures that apply for all purposes including company car tax and graduated vehicle excise duty.

Briefly, finding the right CO2 figure is straightforward for cars first registered from March 2001 as it is almost always shown in the car registration document (V5). For cars registered between 1 January 1998 and 28 February 2001 employers (or company car drivers) can use the database the revenue have commissioned from the Society of Motor Manufacturers and Traders (SSMT). (For company cars first registered before 1 January 1998 engine size is being used as a proxy for CO2 levels.)

The revenue realised that asking employers to find CO2 figures would not be easy unless a specially designed source was made available. That is why the revenue commissioned database from SSMT, to be found at Single enquiries are free of charge.

For multiple enquiries and those who require the whole database SMMT will make a charge. Details of costs are shown in the ‘fleet contract form’, which can be accessed, from the introduction page for the CO2 database on the SMMT?s website.

In the UK the VCA is the government agency responsible for holding type approval data. The VCA has, over the past few month?s been conducting an audit of the SMMT database.

Later in the year we plan to make the database available for revenue staff, so that they can assist any employers without internet access. We have asked employers to send us CO2 figures by the end of this year voluntarily so that we can get employees? tax codes right under the new system before April 2002.

Incorrect tax codes would mean people paying too much tax, or worse, possibly being presented with a bill at the end of the year. We expect employers to take reasonable care to find accurate CO2 figures by identifying the car model correctly.

This means looking at the same sort of information as they already need to check the list price of the car, the fuel, type, engine size and whether the car is an automatic, as well as the make and model. Users will be prompted for all this information as they work through the fields on SSMT database.

If reasonable care has been taken to identify the car and its CO2 emissions figure, employers should not worry if it later turns out the figure was not exactly right, so long as they can explain to us how they got the figure (a printout would be fine) we will be content.

The revenue has gone to great efforts to put on place the means for employers to make returns of CO2 figures as manageable as possible and we shall be repeating these messages in the September edition of the employers bulletin.

Mary Braim, policy advisor on transport benefits, Inland Revenue

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