Cycle to work scheme - possible pitfall

This is from the Q&A page of Cycle (CTC magazine) Feb/Mar 2008 issue. Despite the fact that plenty of employers operate the cycle to work scheme, there is a risk that some will override this fact with what they see as problems; problems explained (and solved) here:

"After two years of deliberation my employer has chosen not to implement the Cycle to Work scheme (which was described in the Feb-Mar 07 issue of Cycle), mainly on two grounds.

First, since the employer is technically the owner of the cycle for the first year, the company has a duty of care to keep it maintained and would be liable for any accident caused by poor maintenance.

Second, if the employer cannot prove that the employee is continuing to use the bike mainly for 'qualifying journeys' (i.e. commuting) then HM Revenue and Customs can reclaim saved tax from both parties, and impose penalties. My employer claims there have been instances of companies falling foul of both these risks.

What is your view on these two points, and are you aware of any cases such as those claimed?"

Reply (edited):

"I cannot see that any employee would have any realistic chance of pursuing a claim against an employer in such circumstances [as the first grounds your employer gave]. Whilst technically the employer is the owner of the bike, the reality is that the employee has custody and position [sic - possession] of the bicycle and will be responsible for any maintenance issues. I do not see this as a valid objection.

With regards to the second objection, Mr Harrison's employers should be aware that many organisations are now providing assistance to their employees through the Cycle to Work schemes. I am unaware of any HM Revenue & Customs investigations into any alleged abuse of the schemes. The Government is committed to increasing the number of journeys made by bicycle in the UK. In practical terms there would be enormous difficulties proving that the employee had not been using the bike for qualifying journeys.

Unfortunately, the Cycle to Work scheme cannot be imposed upon employers. However, in my experience the majority of businesses are willing to participate in Cycle to Work schemes. This is an easy way to provide an additional fringe benefit to their workforce.

Paul Kitson"