Pure tax avoidance

Pure tax avoidance

Lawyer George Frier was presented with a few questions when he took the new BMW 320ED to the roads. But he found out one thing – it more than lives up to its promise.

S5 main2Corporate lawyer plus BMW equals cliché. Smooth, hard driven, pricey but high quality and reliable. But what about the car? I am at BMW dealer Douglas Park to do due diligence and report on the new 320ED saloon retailing at £27,900.

As one on his fifth BMW, currently driving a 5 series Touring (petrol, automatic) which is great but thirstier around town than a Geordie on a stag night, how will I react to a diesel boasting 68mpg average? Yes, 68mpg in a BMW. Usually this is only possible if you switch off at the top of a hill and coast to your destination.

So what is ED? It stands for “Efficient Dynamics”. It could easily be Elegant Design – the test car sparkles in Alpine White, white being the new silver. The silhouette is one of the best known, given that it is a top ten seller across the UK.

BMW has always been synonymous with driving pleasure, so is this about Engineering Design? They are one of the few makers to stick with rear wheel drive to provide the optimum 50/50 front/rear weight distribution.

With this model, however, have the accountants been put in charge? With a CO2 emission of 109 grams/ km, annual road tax of £20 and a class-leading benefit in kind (BIK) charge of only 13% (beating its slower, thirstier rivals, the Audi A4 and Mercedes C220), has the Ultimate Driving Machine been emasculated? Does ED mean Economical but Dull? First impressions are: Usual BMW.

Understated cockpit design, high quality finish. The driving position and ergonomics are excellent. The cabin could be a problem for Scotland rugby star Richie Gray who might need a convertible, but it is more than comfortable for a six-footer, although the back seat would not be comfortable for three adults.

The engine starts with a muted burble. Both inside and outside you would know it is a diesel from the slightly obvious vibration on tickover. I am heading to Edinburgh and at the first lights I get hooted at by the car behind (a BMW, naturally) for not moving off on the green. The fuel saving automatic stop/start has kicked in, restarting only when you depress the clutch. You quickly get used to it.

The transition from slip road to outside lane is smooth through the six-speed gearbox which is a delight to use. The engine has a surprising eagerness that causes me to ease off lest I attract the attention of Plod. There is no difficulty keeping up with the traffic (a heavy flywheel apparently helps) or indulging in traditional BMW pastimes such as tailgating traffic which has the temerity to be in the (my) outside lane. Tyre rumble from the low-resistance tyres is a little bit intrusive but wind noise is not.

On motorway gradients or passing slower traffic, you rarely need to drop a cog such is the torque (low-end pulling power) of the diesel even in eco-friendly guise. And if you forget to use the right gear, an illuminated numeral shows when you should change up or down to the optimum gear for engine flexibility and economy.

Damn their Teutonic efficiency! Stop-start around Edinburgh is as tedious as anywhere but with the consolation that I am using less fuel than those around me. The gauge has barely moved since Glasgow, and it must be contributing to cleaner air around town. Well, the trams aren’t.

Meetings over, I take the scenic route home via West Linton and across to Lanark – a loop through the Borders to try it on a mixed A-class road. It does not disappoint. Cornering is supremely composed, and a high average cross country pace is comfortably achieved.

OK, other cars, other BMWs, might do it a wee bit faster, but in reality does it matter to anyone other than Jeremy Clarkson? It is more than powerful enough, but more importantly the diesel engine is extremely flexible.

Once home, I check the mpg and despite my best efforts to be uneconomical it has delivered about 58 mpg. Astounding! So this is a car which delivers 98% of usual BMW qualities coupled with a Calvinist distaste for drinking. Faced with an Engineering Dilemma of how to beat the Chancellor’s CO2/km threshold, the result could have been Extremely Disappointing.

It is not. You should never do a deal just for the tax breaks. It still has to be a good deal. So is this a corporate acquisition I would recommend? Well, it depends on what you want. At these emission levels its exhaust is peppermint fresh.

Collectors of Shell points will lose out, given the 900-plus mile range between refills.

The Chancellor’s deficit reduction plans will be in disarray as savvy fleet buyers take advantage of the 100% first year capital allowances, low leasing costs, and 13% BIK liability to slash the tax charge.

Would I buy one? It’s a bit small for my family needs, but the 520 ED due later this year will be very tempting if the engine copes with the larger body and still beats the threshold.

Is it still the Ultimate Driving Machine? Not quite, but it is probably the Ultimate Combination of Great Driving Machine in a Highly Tax Efficient Package.

( I know that’s pretty wordy, but then I am a lawyer.) “Tax avoidance can still be fun” would be one description.

If you or your company are in the market for a compact executive saloon, and you do a lot of (especially) motorway miles, the question is – why wouldn’t you want one? It’s a no-brainer.

George Frier Head of Corporate Law, McClure Naismith LLP gfrier@mcclurenaismith.com

Thanks to Douglas Park BMW, Glasgow for provision of the test car.