The cost of the January VAT rise may equate to a lot more than 2.5 per cent for many fleet operators, due to the hidden penalties incurred for late filing and making of payments – with many organisations set for an uphill struggle to update the multitude of documentation before VAT rises to 20 per cent at the turn of 2011. This is the warning from Karan Ridgard, operations director of fleet software house and consultancy, Chevin Fleet Solutions.
The long list of VAT applicable cost items includes obvious big ticket expenditures, such as vehicle purchase or hire, as well as fuel, maintenance, parts and servicing; all of which can be time consuming and potentially erroneous to change manually using outdated methods of fleet management, particularly for larger or more complex fleets.
Commenting on the pitfalls faced, Karan said: "When any new legislation or policy is planned or introduced, fleet managers should be closely examining how it will effect operations, to ensure compliance and avoid unnecessary expense.
"Although we had to overcome the same challenge earlier in the year, many fleets will still be caught out by the VAT increase, which will result in a blow to the budget when the year has barely begun. To make matters worse, if VAT returns are filed late, and/or done so incorrectly, organisations will be looking at paying a fee of 2-5 per cent of the due amount."
To avoid such costly hazards, many organisations now rely on sophisticated fleet management software to automate the processing of legislation changes, thereby removing the opportunity for human error and reducing administration hours. Flexible, web-based systems are able to automatically consolidate tax changes across all departments and from external suppliers seamlessly, allowing personnel to carry on business as usual.
Karan concluded: "It is easy to make small mistakes when it comes to legislation changes, but they can come at significant financial cost to the business. The only way to consistently avoid such expense is to ensure your fleet management application is capable of effortlessly integrating new data into existing systems."