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Fuel Tax Regulations

• Mileage payment for use of a van • Need for attendants on trailers

S.BUCKLEY, Assoc. INST. T, GIVES ADVICE ON TRANSPORT PROBLEMS FUEL tax has been a contentious issue among British road transport operators for many years. It may, at least, be of some consolation to them that similar problems exist elsewhere.

A Norwegian reader, inquiring about regulations in the U.K. concerning the use of fuel oil, gives the background to the situation in his own country.

Very considerable quantities of filet oil, he states, are being used for domestic heating, by the fishing fleet and also in other Norwegian industries. No suitable way has been found to colour or otherwise mark fuel for lorries in such a manner that an easily distinguishable identification of taxable lorry fuel can be effected.

In desperation, he claims the Norwegian authorities introduced the compulsory fitting of mileage meters to front wheel hubs. At set intervals the mileage shown on this officially sealed meter would be registered by an official inspector and the tax payable computed according to the 'type of lorry in a manner so complicated, he states, as to represent probably "a world record among official planning ".

However, it has now become apparent that this unique System makes it difficult for the Norwegian operator to compete with foreign—and especially Swedish—hauliers. But in reply to criticisms the• Norwegian authorities retorted: "Show us a fool-proof alternative "—and it is n this context that our reader has made his inquiry. A short and general answer to such a challenge must be that avoidance of taxation, in all its forms, has been practised the world over for a very long time and no fool-proof system to stop this has yet been devised. The best that can be achieved is to make such a practice—which, of course, is unfair to law-abiding competitors—more difficult and the offence, when revealed, more obviously deliberate.

As regards the present procedure in relation to the taxing of fuel for road vehicles, this is laid down by the Commissioner of Customs and Excise under Section 199-202 of the Customs and Excise Act, 1952. Notice of such procedure sets out the operation and scope of the duty, the vehicles which may use the rebated oil as fuel and the obligations upon dealers in heavy oil. Of particular importance to road transport operators are the obligations under the Act upon users of "heavy oil vehicles" (that is, the legal definition for oil engine vehicles), the powers of Customs and Excise officers and the penalties for breach of the regulations.

The current amount of tax payable on fuel oil (and also petrol) used by road vehicles is 2s. 9d. per gallon. As in Norway, increasing quantities of fuel oil are being used in agriculture, shipping, industry and domestic heating for which a much lower tax is payable.

To deal with the situation of there being users of both tax and rebated fuel oil, road transport operators are required by law to keep records of their fuel oil stocks. together with details of journeys made and fuel consumed by all vehicles fitted with oil engines and to make available such records to any authorized person requiring to inspect them.

This procedure may seem illogical, as the users who have paid the higher tax are the ones required to keep records, whilst those enjoying the privilege of rebated fuel do not. The explanation would seem to be a practical one—namely that the total gallonage of fuel oil consumed for low-tax purposes far exceeds that consumed by road vehicles.

Regarding the penalties for breach of the regulations, any person using fuel oil on which the lower rate of tax has been paid for purposes for which a higher rate of tax should have been paid, is liable to a penalty equal to three times the value of the fuel oil concerned, or £100, whichever is the greater. Moreover, both the oil and vehicles in which it was used are liable to forfeiture. Apart from the misuse of rebated oil, any breach of the regulations governing the use of fuel oil involves liability to a penalty of £100, as does obstruction of a Customs and Excise officer in the performance of his duty, or to imprisonment, or to both.

The tainting of fuel with, for example, a coloured dye so as to distinguish between different types of fuel has been practised in this country over a period of some years. In the immediate post-war years, when all road fuel (petrol and fuel oil) was on ration, it became necessary, to add a distinguishing dye to petrol used in commercial vehicles. This was because the amount allocated for private motoring was extremely small and, before dyeing of fuel was introduced, some commercial coupons for petrol were misused to obtain supplies for private motoring. Accordingly, colouring of fuel was introduced with the necessary segregation of stocks.

Superficially, this would seem a practical solution, as c47

with the similar distinction between fully taxed and rebated fuel oil. But ia addition to complications of stocks and detiveries, there is a further serious objection. It is relatively easy for a person so minded to surreptitiously put coloured fuel into the tank of a vehicle owned by another person — possibly a competitor — and so seriously compromise that person. Conversely, a claim that this had in fact been done (wrongly, of course) could be put up as a defence by persons deliberately misusing low-tax fuel. In either case it might he difficult to prove'to the satisfaction of a court of law that an offence had been committed in fact as distinct from circumstantial evidence.

On balance, therefore, although a further addition to non-productive clerical work, the present requirements on road operators in the U.K. to keep records confirming the correct relationship between fuel oil supplies and fuel oil use, is an acceptable compromise.

The real solution, of course, is the complete removal of what is virtually a luxury tax imposed on essential services.

A Derbyshire contractor states that an employee, at his request, is using his own 7-cwt. van for business purposes to the extent of approximately 2,000 mites per year, and asks for guidance as to the rate per mile which they should remunerate him for the use of his vehicle, As with all estimates of operating costs it is necessary to know the average weekly or yearly mileage. In this instance the van is presumably used both for private and business purposes and accordingly an average total yearly mileage of 5,000 (that is, 2,000 business and 3,000 private) has therefore been allowed for.

The 10 items of operating costs can be conveniently divided into standing costs and running costs. Dealing first with the standing costs, the annual licence duty would be £15 (assuming an unladen weight of 15 cwt.) so resulting in an equivalent standing cost per week of 6s. Id.

For the purposes of remunerating this employee for the use of his vehicle, it will be assumed that whilst so doing he is already in receipt of wages appropriate to his particular duties, so that no additional driver's wages have to be allowed for whilst he is using his van.

Because it is privately owned the van will presumably require garaging at the employee's home, for which facility an arbitrary amount of 14s. a week will be allowed. The amount of insurance premium payable can vary substantially for a variety of reasons. Allowing £20 per annum, the •equivalent standing cost per week would be 8s., whilst interest at a nominal rate of five per cent on the initial outlay of £420 would add 8s. 4d. a week. This gives a total for the four items of standing costs (omitting wages) of £1 16s. 5d. a week.

If the initial assumption that the van is used for both private and business purposes is correct, then employer and employee will have to agree mutually as to the proportion of the standing costs which can be fairly claimed as incurred for business purposes. Failing any other yardstick, a division on the basis of the total yearly mileage as between private and business use might be considered acceptable.

As regards running costs it will be assumed that petrol is purchased at a bulk price of 4s. Id. per gallon, despite its provision being the responsibility of the employee. Normally, such a van might average 30 m.p.g., but because of the relatively low average mileage an increase in consumption of 20 per cent is allowed for, with a resulting fuel cost per mile of 1-96d. Lubricants are reckoned to add 0-18d. and tyres 0.34d. a mile, assuming an average life per set of 20,000 miles.

Maintenance, inclusive of washing and servicing, is c48 reckoned to cost 1.75d. a mile, with depreciation adding 1-68d. This latter calculation is normally made on a basic vehicle life of 75,000 miles, but again, because of the low average mileage, a 50 per cent increase on this calculation is made to give the figure stated. The total for five items of running costs is therefore 5.91d. per mile.

Unlike the total standing costs, the whole of this amount will be payable to the employee for the mileage operated by him on business, in addition to whatever proportion of the standing costs have been agreed. Payment of the total running costs would pre-suppose that the employee was taking total responsibility for all expenses incurred in running his van, and that no repair work was carried out at his employer's expense, either on his premises or elsewhere.

Whilst this inquiry is concerned only with operating costs, it is pertinent to add that in any arrangement of this nature it is imperative that both parties ensure that the licences and the insurance cover under which the vehicle operates are appropriate to the work undertaken.

" When are attendants required on trailers? is the gist of another inquiry.

Section 72 of the Road Traffic Act, 1960, requires that one person in addition to the driver of the vehicle shall be carried either on the vehicle or on the trailer for the purpose of attending to the trailer or trailers. However, Regulation 110 of The Motor Vehicles (Construction and Use) Regulations, 1963, fists a considerable number of exceptions to this requirement which in the main concerns the use of vehicles for special purposes—including agriculture, road repair and cleansing, and for military purposes.

As applied to general haulage, an attendant is required when what is commonly referred to as a drawbar trailer is towed by another vehicle. An attendant is not, of course, required when such a combination constitutes an articulated vehicle, or when the trailer itself does not exceed one ton unladen weight. Another exemption of more general application applies to a vehicle drawing a broken-down vehicle which cannot be steered by its steering gear,

SURELY Mr. C. Erith is not serious when he states in your issue of January 17 that the Neates NBC/14 single-stroke handbrake "gives a higher handbrake efficiency than a power-assisted lever ".

A single-pull, power-assisted handbrake can be designed for the heaviest vehicle to produce the optimum brake efficiency within the limits imposed by the adhesion of tyres to road and will lock the road wheels of a fully laden vehicle without using abnormal physical effort. This cannot be said of a purely mechanical handbrake.

An air-assisted handbrake requires no more "complicated maintenance" than an ordinary handbrake mechanism. In actual fact, less maintenance is required as the mechanical leverage can be substantially lower, thus reducing the frequency of rear-brake adjustment necessitated by the handbrake lever travel.

I would agree that there are many vehicles on the road today with inefficient and badly designed handbrakes, especially on some vehicles fitted with third-axle conversions. The single-pull mechanical handbrake of a 12or 14-ton vehicle was never intended to be used for a vehicle of 20 tons g.v.w. It appears that power assistance is the solution here.

In my opinion a well-designed, single-pull mechanical handbrake is satisfactory for vehicles up to 14 tons g.v.w., but a fairly high leverage is required necessitating frequent brake adjustment, although the variable ratio of the Neates NBC/14 does give an advantage in this respect.

For vehicles substantially over 14 tons g.v.w., there are two alternatives: either a multi-pull, mechanical handbrake or a power-assisted, single-pull handbrake. The multi-pull handbrake permits a high overall leverage to be employed but suffers from the fact that in an emergency a very poor efficiency is recorded when measured in terms of stopping distance. The power-assisted handbrake provides maximum efficiency for both hall holding and emergency use.

Euxton, or. Chorley, H. WALKDEN Lanes.

Heavy Goods Vehicle Drivers the Safest on the Roads

A LTHOUGH preferring to remain an interested spectator

I must join issue with Wg. Cdr. E. V. Humphrey.

What is he trying to prove concerning the 1962 accident figures when he says that 96,041 accidents involved heavy vehicles and 185,000 involved private cars—five times as many of the latter being licensed compared with the former? He says earlier that "The endless streams that choke up the roads are of lorries, not private cars, which come out in force only on high days and holidays ". Taken together do not these two statements support the view expressed by many chief constables that heavy goods vehicle drivers are, as a class, the safest on the roads? Those who deal with vehicles regularly know that the heavy usually does 30,000 to 50,000 miles per annum-some reaching an even higher figure—whereas the private car is more likely to do 10,000 to 12 000 miles, exceptions such as representatives and business cars reaching 20,000 to 25,000 miles per annum.

I cannot write with recent experience of the A365, though when I motored along it some 18 months ago its traffic did not seem particularly different, to my eyes, to that of any other main road. For well over two months now I have travelled 40 odd miles a day in each direction, along A50, Ml, M45 and A45 (a fairly typical trunk route, one might assume) passing. some 80 to 100 commercial vehicles in each direction. At my normal cruising speed of 40-50 m.p.h. in my not very new car (I work in road transport!) I can truthfully say that I overtake heavy vehicles far more often than I am overtaken by them on

any section of this route. In my experience the heavy driver who is not a good example in road manners, behaviour, and driving skill, is the exception—and which section of the community does not have its black sheep? Of the accidents that I have seen in this period, and these are far too many, private cars are involved more often than heavy vehicles.

Come off the "high flying" Wing Commander!

Northampton. M. D. BUSH.

FROM THE POSTBAG

A READER who is interested in the development of contract hire in this country and the expansion of company-owned car fleets, asks if any figures are aYailable for comparable developments elsewhere.

DESPITE the numerous statistics issued by the Ministry of Transport and trade associations relative to the current number of types of vehicles and the licence under which they operate, more recent trends as to the growing number of vehicles operating on contract—though not necessarily limited to a Contract A licence—are difficult to assess.

However, revealing figures have recently been issued in respect of vehicle sales in Canada. The number of fleet-owned cars bought in that country last year was more than 7Gper cent higher than in 1959. Leasing companies accounted for 64 per cent of fleet sales, company fleets 25 per cent and government 11 per cent.

In the commercial field, however, governmentowned trucks accounted for 28 per cent, companyowned trucks 57 per cent, with only 15 per cent on lease. It is significant that even in North America, which could be considered the home of vehicle leasing, truck leasing has not proved as popular as car leasing because, one producer claims, the control over vehicle condition is not so readily maintained with commercial vehicles.

MONEY MATTERS

leyla

otors Optimism

L'OLLOWING news of the doubled trading profits the I market looked forward to the annual report of LEYLAND MOTORS with a good deal of hopeful interest. Such hopes were fully met. Taking an overall view of the group, Sir William Black comments that "the state of our order books encourages me to be optimistic". The current trading year has started well and virtually all companies in the group have substantial order books. A special products division has been set up to cope with the growing demand for power units; he states there is a "substantial and growing business" to be done in engines, units and equipment for various makers at home and abroad.

Such has been the development of the group that Sir William rightly points out it is now of a size, particularly at home, where it is to a large extent dependent upon the state of the economy as a whole. Of exports, the breakdown of the Common Market talks was a disappointment, but the board has taken steps to maintain sales of products in Europe; extensions to plant in Belgium and Holland are in hand and the assembly and sale of the group's products in France is being arranged. From the stock market point of view salient features in the report were the improvement in the cash position (almost Om. better) and that bank borrowings are down to around Um. which, for a group of this size, is reasonable.

Sir William's optimism about the trading outlook is equalled by the market so far as the investment outlook is concerned. The immediate reaction to the report was

to mark the price up sharply to 100s. As a London stockbroker commented to me: "They would have gone over the £5 market in brighter market conditions ". Nevertheless, at around their present price of just under .£5 to return 41 per cent on the latest 121 percent dividend, covered more than 11 times, they are a good buy.

These bright Leyland prospects could mean better things For component makers such as Hailwood Industries. In 1932 this company was styled Tanaml (Australia) Gold Mining Syndicate, changing to its present title in 1956 on acquiring the glassware and light engineering business of Hailwood and Ackroyd, Morley, Yorks. Under the chairmanship of Mr. Walter West (who is also a director of Leyland Motors) ably supported by managing director H. A. Scott (ex-Simms Motors) the board of this compan), has pursued a successfully progressive policy. The glass section has declined in recent years, but has been replaced by a full-scale entry into the expanding field of hydraulics and fuel injection. On a recent visit I was impressed by the extensive new productive capacity laid down. The future was confidently defined when Mr. Scott told me he was "highly optimistic about the company ". A scrip issue of one new Ordinary share of Is each for every three shares held was made recently; the directors hope to maintain the latest IS per cent rate of dividend on the capital thereby increased. These shares are currently priced around 4s. dd.

Martin Younger