The company Licence Check has raised concerns over the compliance risks that grey fleet vehicles present to their employers. It urges that appropriate policies and procedures be prioritised to minimise any issues.
'Grey fleet' is the term used to describe any vehicles that do not belong to the company, but which are used for business travel. This might include a vehicle purchased via an employee ownership scheme, a privately rented vehicle or a vehicle privately owned by an employee.
Official figures show the number of UK employees using company cars fell by around 20,000 in the last tax year. Many drivers have switched from a company car to cash allowances due to the rising associated tax. HMRC has estimated a 2% drop to 940,000 drivers paid Benefit-in-Kind on a company car in the 2016/17 tax year.
This means that more company car drivers will now be using their own cars for business purposes. Studies have shown that these vehicles are typically older, have more sporadic service histories and emit higher levels of pollution. They can also sometimes be incorrectly insured.
Companies are failing to recognise that grey fleet vehicles fall under the same legal obligations as company cars. They must be fit for purpose, safe to use and on the road legally. The company is culpable in the event of any accidents involving these vehicles too.
Director of Sales at Licence Check, Richard Brown, commented on this, stating that companies of all sizes appeared to be unaware of the consequences of allowing employees to drive their own vehicles for business purposes without compliance checks:
“Businesses often incorrectly assume that, because the vehicle is owned by the driver and not the company, they are exempt from any responsibility. However, that completely ignores their legal obligation to ensure that grey fleet vehicles are reasonably safe to use, are fit for purpose and are lawfully on the road.
“Employers put themselves at risk of claims by third parties if employees are driving on company business and are involved in an accident, without having proper business insurance cover.
"Equally, there is a risk that employees who are driving vehicles that are not roadworthy could cause harm to others, which could lead to the employer being prosecuted and heavily fined if they do not have a robust grey fleet policy in place.”
Previous research by Licence Check revealed that grey fleet drivers were most commonly receiving endorsements for speeding, construction and use offences, such as bald tyres, defective brakes or carrying unsafe loads. Other common licence endorsements were insurance offences, typically vehicles uninsured against third party risks.
Brown recommended that businesses remember to include grey fleet drivers in corporate risk assessments and run thorough licence checks on a regular basis.
“As we have seen, a growing number of employees are opting for cash allowances and using their own cars on company business due to increases in Benefit-in-Kind taxation," he said.
"Grey fleet drivers should be checked as regularly as if they were company drivers, including confirmation that they have the correct business class insurance and that they are eligible to drive the type of vehicle they are driving."
Brown mentioned that there are positive aspects to these more thorough compliance checks and appropriate procedures. Businesses could benefit financially by reducing the time grey fleet vehicles are off the road due to breakdowns, as well as reducing the risk of prosecution and imprisonment faced by senior managers and directors for any non-compliant vehicles.
“The savings achieved will more than justify any investment costs over a fairly short period,” said Brown.