FLEET managers are refusing to be tempted by cheap cars from the continent sourced via the internet. Issues surrounding benefit-in-kind taxation and the impact on residual values means fleets are turning their back on internet-based offers, despite claims these sites can save thousands of pounds off the UK list price.

One of the key considerations is the Inland Revenue treatment of imports. It has said there is no advantage in sourcing a car from abroad as the driver will still pay BIK on the UK list price of the car. Jim Greaves, group services manager at William Hill, which has a fleet of 228 outright purchased vehicles, said: 'If it was a good deal we'd be taking advantage. The fact it doesn't make any difference to BIK liability means it's hardly likely to win new friends. As long as there are different tax rates in Europe, the argument about new car prices won't go away, but that is impractical, so we are more likely to see the continuation of price realignment with continental prices rising.'

Susan Short, senior human resources adviser at Toshiba Information Systems, said: 'You may be saving up front by sourcing from abroad, but the BIK will be no better. I can see an employer being attracted by this, but it's hardly likely to appeal to the drivers.' John Dewar, transport manager at the Local Health Partnerships NHS Trust, said the pricing pressure, acerbated by the Consumers' Association's campaign, could lead to a residual value disaster.

'Leasing companies are making it clear we shouldn't expect rentals to come down if list prices fall. They have millions of pounds to lose because of the residual values they have set on existing stock. Rentals could go up as they try and recoup losses in the event of a price fall,' he said.