Insight and Know-How

The government has been urged to reform the tax regime to make it fairer for logistics companies.

Many companies are feeling the squeeze as a result of the current economic slump and the general consensus is that a noticeable improvement is not in immediate sight. As a result, industry organisations and campaign groups have been putting pressure on the government to make changes that can support and encourage growth in their sector at a time when businesses are struggling. The Chartered Institute of Logistics and Transport (CILT) is among those lobbying for reforms, in particular changes to the tax regime for commercial vehicle operators. Steve Agg, chief executive of the body, identified Vehicle Excise Duty (VED) as one major bone of contention, along with fuel duty, as the current system does not reflect the circumstances of companies in the logistics sector.

"Commercial vehicles and private cars are taxed in the same way, despite the fact they are used for widely different purposes," he commented. However, Mr Agg welcomed news that the government is consulting on plans to charge lorries that are registered overseas for driving on roads in the UK. Under EU law, British vehicles must be subject to the same charge, but the coalition is looking at various ways of offsetting it, such as adjusting their VED liability. Mr Agg argued that this "revenue neutral" approach for UK-based hauliers could represent the first step towards building a "fairer system of taxation" for the logistics sector. This, he said, could have positive long-term benefits for consumers and businesses across the country. He added that lorry operators in the UK currently have to deal with "higher rates of operating tax than apply elsewhere", as there are "substantial" differences between the amounts foreign hauliers pay in VED and fuel duty and the sums paid by firms in Britain on these taxes. The Department for Transport's consultation on charging foreign lorries for using roads in the UK concludes on April 18th 2012.