I note that a reputable firm of accountants is circulating a notice about the withdrawal of the local HMRC agreements with motor dealerships where employees benefits relating to the use of demonstators is averaged.

Of course their take on the scenario is that this is going to increase the value of the benefits and therefore the tax payable by the employees and almost designed to cause panic.

According to page 4 of HMRC new arrangements it states on page 4 that there is no intention to increase taxes but merely simplify the calculations.Whether this is correct is another fact and time will tell.

The new process shows:

Step 1- Identify cars to be averaged

Step 2- Separate cars into groups

Step 3-Calculate the average price of the notional car in each group

Step 4-Calculate the average CO2 emissions and appropriate percentage of the notional car in each group

Step 5- Determine the benefit charge for the notional car in ewach group

Step 6- Identify employees

Step 7- Allocate employees to each group

In reality all that is happening is the method is being set in stone rather than allowing individual HMRC offices to allow variations and is designed for consistency.

See the full notes on HMRC website

http://www.hmrc.gov.uk/cars/averaging.pdf