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HMRC starts scrutinising business mileage claims

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 ?? Fraudulent business mileage claims – were you aware ??

The amount to which businesses are losing on fraudulent fuel mileage claims is immense: one in four staff submit fraudulent business mileage claims believes TMC. “The Revenue is not wrong. It’s an easy area to prove discrepancies and for HMRC to get some revenue in,” says TMC’s Paul Jackson.

Pensive businessman considers that amount of business mileage fraud in his company
Your business: drained by false mileage claims?

HMRC is starting to take a close interest in the business mileage claims submitted by company car drivers.

According to business mileage audit firm The Miles Consultancy (TMC), winner of the Guardian Energy Savings Trust Fleet Hero Innovation Award 2011, there has been a wave of HMRC investigations across a variety of different industry sectors.

“Over the last three months, we have been asked to attend more and more companies that are being investigated over business mileage claims by the HMRC,” said Paul Jackson, managing director, TMC.

Mr Jackson said that a survey of TMC’s own 100 company database found that 25% of all employees had submitted fraudulent fuel claims.

25% of business car drivers claim fraudulent miles says TMC

“It’s not unusual for us to find that on an average monthly £300 fuel expense mileage claim, there is only £6 allocated to private mileage. That’s across the board.

“The Revenue is not wrong. It’s an easy area to prove discrepancies and for HMRC to get some revenue in,” said Mr Jackson.

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TMC said it knew of five on-going cases in the last four months, ranging from fleets with 103 cars to those with 1200 cars with more than £2,000,000 in back taxes and fines possibly on the line.

While Mr Jackson acknowledged the corporates in question were large entities saying that these represented easier pickings for HMRC to reclaim revenue, he also added that HMRC was turning it attention to SME firms as well.

“Businesses need to be aware that HMRC is now very closely focused on the way they record and check mileage claims. They can expect to be challenged over any errors or omissions in their records that might have led, even inadvertently, to underpayments of tax on cars or fuel,” continued Mr Jackson, adding: “Businesses need to realise that mileage recording by itself is only half the battle. Unless you also audit your data you’re simply ensuring that your business is an obvious target as far as HMRC are concerned.

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“Whatever you unwittingly pay for phantom business miles will double if the taxman comes along and decides to audit your records for you.”

HMRC says that good and accurate record keeping is critical to running a small business. The Federation of Small Businesses says small businesses are at risk of spot checks from the HMRC who are targeting business records.

Further information on business mileage

If you would like to read more on business mileage fraud in a conversation with Paul Jackson, then read the Editor’s Blog Business mileage fraud.

Additional information in stories we’ve covered before include Good record-keeping makes a good business and Small businesses at risk of HMRC spot checks.

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