Q I have obtained a copy of the CM Tables
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of Operating Costs, but would like to know, in the case of a new vehicle, what figure is taken for the cost of a set of tyres? The retail price of a Michelin 020 type X 10.00-20 tyre is £53. Such a tyre can be bought from a tyre dealer for about £40. What price would apply to tyres fitted on a new vehicle, and should proposed tyre recutting be included in the initial estimate of the tyre costs?
In the case of a vehicle purchased new, how should one treat any discount that is allowed on purchase price — should such a discount be disregarded when one estimates depreciation?
AThere is no hard and fast rule in tyre costing, but in the Tables the price taken for a set of new tyres is that for the set of the si2e most commonly used on the particular capacity of vehicle at an average retail price. No account is taken of the fact that discounts can be obtained and other cheap tyres are available. Re-cutting is not considered for the purpose of the cost tables but there is no reason why you should not take this into account in your own calculations.
So far as discount on a vehicle is concerned you may disregard it in calculating depreciation so that in effect you are treating the amount of the discount as a kind of bonus. On the other hand the supplier's invoice will invariably show the amount of discount and the actual amount paid so that this will be the figure entered in your accounts. Therefore it follows that when the accounts are presented for the Inland Revenue they will expect to see a depreciation charge related to the price actually paid for the vehicle, not the amount which could have been paid had there been no discount. If, however, the supplier's invoice shows only the full retail price than the question does not arise.