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  • Automotive at

    1, London Street, Reading, RG1 4PN t: 0118 951 6200 f: 0118 950 2704

    Automotive Quarterly updateFebruary 2017. Automotive companies have featured heavily in the news since the last quarterly went to press.

    Much of that news focused on risk and regulatory issues - ongoing investigations into bribery and corruption persist in

    Germany, EU guidance has been released to help Member States evaluate if car manufacturers use defeat devices and,

    perhaps most significantly to readers of this quarterly, there has been a sustained assault on the diesel engine (which

    make up nearly one half of EU car sales). That is:

    Sadiq Khan wants to ban them from London (and Paris, Mexico City, Madrid and Athens are set to do likewise)

    Chris Grayling, Transport Secretary warned, last week, against buying a diesel vehicle; and

    The governments chief medical officer, Dame Sally Davies, said on Radio 4s Today Programme that diesel cars

    should be phased out to cut the tens of thousands of deaths caused each year from air pollution.

    Diesel car sales are suffering. Official figures stated that 78,778 diesel cars were sold in January 2017, a drop of 4.3% on

    the same month last year.

    In response, Mike Hawes of the SMMT pointed out that the way to address the issue of diesel air pollution was to make

    diesels cleaner, not ban them from cities or phase them out altogether:

    The diesel engines of today have got immeasurably cleaner than those of yesterday What we need to do is continue to

    improve them so that you can address the NOX emissions in the same way that weve addressed the particulate emissions,

    sulphur emissions, lead in petrol and so forth its an evolution in technology The challenge to the industry is to get the

    newer vehicles on the road as quickly as possible.

    One thing is for certain, whilst environmental issues are not likely to feature highly in the USA under the Trump

    administration, the position in the EU is in stark contrast and it seems likely that the microscope will stay on the diesel

    engine for some time yet.

    Finally, given that a recent survey found that the majority of consumers werent aware of changes to the new car VED

    regime coming in April, now seems a timely reminder to all dealers and related parties that under the new system, two

    thirds of the AFVs that currently qualify for the 0 standard rate will now be subject to an annual flat rate charge of 130, in

    addition to varying levels of first year tax. Meanwhile, those with list prices above 40,000 which will include some of

    these new technology vehicles will also have to pay an annual 310 premium car surcharge.

    As ever, I hope that the content of this quarterly (which focuses on recent regulatory issues and the issue of salary

    sacrifice) are of interest and if there is anything you would like to see covered off in the next quarterly, please do call or

    email the writer,

    February 2017

  • Readers may be aware that the Competition and Markets

    Authority (CMA) was planning to investigate allegations that

    BMW UK was restricting its dealers' use of the price

    comparison website to list new BMWs and MINIs.

    The investigation was proposed after carwow made a

    complaint to the CMA in 2016. However following carwow's

    referral BMW announced that it had changed its UK policy and

    so the CMA decided, in January 2017, not to pursue the matter

    any further.

    Although the case has been dropped without the CMA making a

    decision as to whether BMW's policy breached competition law,

    it seems that car manufacturers have to accept that price

    comparison websites have a place to play in the market as they

    help to promote competition by allowing consumers to

    compare the prices for new cars offered by different dealers

    rather than having to spend time travelling around and

    negotiating with individual dealers.

    If you would like further advice on the above please do not

    hesitate to contact Cathrine Ripley.

    (DDI 0118 951 6285/


    For the purposes of the new rules, ULEVs are vehicles with

    emissions under 75 grams of CO2 per kilometre. The emission

    level for exempt ULEVs may be updated in future, to be

    consistent with any changes to the treatment of these vehicles

    within the car benefit charge.

    Options before 5 April 2017

    It is anticipated that there will be a huge rush in salary sacrifice

    car benefit tax up between now and 5 April, when the new rules

    come into force.

    Anyone taking a new salary sacrifice car in the period up to 5

    April 2017 will have the arrangement protected until 2021. But

    from 6 April 2017 new agreements for salary sacrifice can only

    gain tax benefits if the car has ultra low exhaust emissions.

    If you would like further advice on the above please do not

    hesitate to contact Philippa Roles.

    (DDI 0118 951 6371/

    Price comparison websites for

    new cars are here to stay

    As we say goodbye to salary sacrifice incentives making company

    car ownership tax effective, we welcome in an era of increased

    tax incentives for leasing ultra low emission vehicles.

    Up until now, the use of salary sacrifice arrangements in

    employment has enabled employers to give their employees a

    little something extra in the form of tax effective purchases of

    every day items. Salary sacrifice arrangements enabled an

    employee to surrender part of his salary in return for a non-cash

    benefit, such as a leased company car. The tax effectiveness of

    the arrangement was achieved by taking the cost of leasing the

    car from the employee's gross (pre-tax) salary, thereby reducing

    the amount on which income tax and National Insurance was


    All Change

    The scheme has benefitted thousands of drivers, but soon will be

    no more. In the 2016 Autumn Statement the Government

    announced that:

    employees swapping salary for benefits will pay the same tax

    as the vast majority of individuals who buy them out of their post-

    tax income.

    So with that the Government will be removing the tax and

    employer National Insurance advantages of salary sacrifice

    schemes from 6 April 2017.

    The only areas of the old salary sacrifice arrangements that will

    remain unaffected by the culling are arrangements relating to

    pensions, childcare, Cycle to Work and Ultra Low Emission

    Vehicles (ULEVs).

    Existing Contracts

    Current salary sacrifice contracts where the arrangement does

    not relate to cars and/ or accommodation and/ or school fees will

    be allowed to continue operating under the pre-April 2017 rules

    until the earlier of:

    (i) the contract end date;

    (ii) the modification of the contract;

    (iii) the renewal of the contract; or

    (iv) April 2018.

    In the case of salary sacrifice arrangements for cars and/ or accommodation and/ or school fees the April 2018 cut-off is extended to April 2021.

    Company cars & the end of salary


  • The automotive industry can be a stressful environment.

    When performance, misconduct and other workplace disputes occur it

    is not uncommon for the employees involved to be signed off with

    stress. These employees will qualify as disabled and be protected

    from discrimination if they can show they have a mental impairment

    which has a substantial and long-term adverse effect on their ability to

    carry out normal day-to-day activities.

    A recent case in the Employment Appeal Tribunal (EAT) offers helpful

    guidance on when stress might amount to a disability.

    The case concerned an individual who was on long-term sick leave due

    to workplace stress. He brought claims alleging disability

    discrimination by his employer, relying on stress to establish a

    disability. An employment tribunal determined he was not disabled and

    the claimant appealed.

    The EAT upheld the tribunals decision. Focusing on stress, it echoed

    the tribunals findings that his stress was largely a result of

    unhappiness about what he perceived to have been unfair treatment

    and that he had provided little or no evidence that his stress had any

    effect on his ability to carry out day-to-day activities. It held that he had

    failed to establish that he was disabled as he did not establish a

    mental impairment nor the requisite substantial long-term adverse


    The EAT explained that there is a distinction between a clinical mental

    impairment and what is simply a reaction to life events.

    Automotive employers across the industry will welcome this decision,

    which confirms that the burden rests with employees to show that

    their work-related stress has a substantive and long-term adverse

    impact on their day-to-day activities. The decision also suggests that

    without appropriate supporting evidence, a doctors note referring to

    stress will not on its own be sufficient to establish a disability.

    However, employers should still be proactive wh