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MPs look to confirm Motability’s £888m tax exemption outlined in NAO report

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A government committee has asked the treasury to confirm £888m of tax exemptions provided to the Motability Scheme in the in the form of VAT zero rating for the hire and sale of the scheme’s equipment.

Following a session earlier in January where the NAO and Motability bosses gave evidence to MPs as part of an inquiry into the scheme, committee chairs, Nicky Morgan and Frank Field, have written to Work and Pensions Secretary, Amber Rudd.

In the letter, Ms Rudd was asked to confirm the sum of tax exemptions handed to Motability as outlined in the NAO’s report last year.

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The letter said: “The NAO concluded that the tax exemptions provided to the Motability Scheme in the form of VAT zero rating for the hire and sale of the Scheme vehicles, and exempting the Scheme vehicles from Insurance Premium Tax amounted to £888 million in indirect support to Motability Operations in 2017, support that no other private company is able to access.”

The committees also sent a separate letter to Ms Rudd asking for further information on the governance arrangements and DWP policy regarding Motability.

The chairs wrote: “The evidence we heard gave us little confidence that the issues raised by the NAO in its report on the Motability Scheme have been fully taken on board by both the charity and by Motability Operations.

“Given that your department has a unique relationship with Motability…our evidence raised significant questions about the Government’s oversight of the Motability Scheme.”

The letters are the latest development in an inquiry into the Motability Scheme and the way in which it manages its finances and in particular, its remuneration policies.

It was revealed recently that its boss, Mike Betts, who will be stepping down, was given a £2m bonus by the firm the runs the scheme, Motability Operations.

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Joe Peskett

The author Joe Peskett

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