Small firms warned: flagging out is too
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• by Guy Sheppard Flagging out will remain a tough option for 75% of UK hauliers, even though operating costs are up to 20% lower on the Continent.
That is the conclusion of business adviser Ernst & Young, which says operators must already have significant business on the Continent to make flagging out viable.
William Tacon, the firm's corporate restructuring partner, says: if a UK operator were to re-register a number of vehicles on the Continent, they could not realistically be used to sustain a business predominantly centred in Britain. Smaller operators—three-quarters of the UK road haulage industry—will find flagging out a difficult option."
The firm's study compares UK and Continental running costs for a haulier with an annual turnover of 21.2m, a pretax profit of 236,000 and a fleet of 10 40-tonners, each covering 160,000km a year at an average 331it/100km.
Hauliers in Luxembourg enjoy the lowest running costs, followed by Belgium, France and Holland. Wage costs and corporation tax are considerably lower in the UK, but our high rates of VED and fuel duty mean UK running costs are 21% above those in Belgium, even though Belgian corporation tax is double the UK rate.
The study warns that the UK Exchequer is likely to challenge any operators who re-register vehicles abroad but continue to use them on UK roads.
"High operating costs are clearly putting pressure on UK hauliers, says Tacon. "Flagging out may relieve some of these, but will add others."
• So far, only international operators have been able to register vehicles abroad while retaining their UK Operator's Licences. Domestic hauliers who want to flag out must move their entire businesses abroad. Copies of the study. Flagging nut: A Viable Option?, are available free from Nick Jones on 0171 951 9925.