Flagging-out works 'for a few'
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El by Karen Miles
FlaggIng-out MI only make economic sense in a small number of European countries, says the Road Haulage Association.
Operators will only be able to save money by registering their fleets on foreign Operator's Licences where low vehicle taxes and workforce costs combine to make the move worthwhile.
The countries most likely to meet these criteria are Luxembourg, the Netherlands, Belgium and Eire. But high social costs and taxes associated with employing labour in countries such as France, Belgium and Italy will probably outweigh any savings on lower vehicle excise and fuel duties.
Domestic operators are barred from flagging-out, and international hauliers will probably only enjoy the concession for a couple of years: the RHA expects the Government to close this tax loop-hole quickly.
These conclusions follow months of study by lawyers engaged by the RHA—work prompted by members wishing to avoid the UK's crippling yearon-year increases in fuel duties and VED rates.
Other expected recommendations include: • Flagged-out vehicles will have to operate "temporarily" in the UK while on genuine international and cabotage work. They could be in the UK for up to eight weeks before returning to their foreign depots, lawyers estimate—but this may need to go to the European Court of Justice for clarification.
• Operators will have to set up foreign-registered subsidiaries and absorb the often higher social security costs of employ ing labour elsewhere in the European Union.
• British drivers will be covered by the labour laws of the country of flagging-out. This will usually be to their advantage as foreign labour law is more weighted towards employees. Drivers might join foreign unions to represent them; the Transport and General Workers Union is already questioning how this will affect labour relations.
• A flagged-out operation will need genuine supervision by a CPC holder, who could be based abroad or make frequent visits from the UK.
• The more trucks involved the easier it will be to outweigh the setting-up costs and hassles of flagging out—for a fleet of 100 trucks more than 2300,000 a year can be saved on VED alone. But owner-drivers should benefit too.