VAT changes which came into effect almost three years ago and could save companies £8-£11 a month on an average fleet car have still to be understood by many businesses, according to GE Capital Fleet Services' managing director Jonathan Burr. New VAT rules which allow companies to recover VAT on cars bought solely for business use came into effect on August 1, 1995 and were widely predicted to spell the death-knell for company cars bought outright by companies.

But this week Burr said: 'There are some huge fleets which continue to buy their cars outright and we still talk to finance directors who don't fully understand the impact of the VAT changes and the advantages there are in contract hiring vehicles.' While, he said, some large fleets which benefited from having 'special terms' with manufacturers had moved from outright purchase to contract hire and retained their 'special terms', many fleets had still to analyse the potential savings of moving to leasing.