A Cambridgeshire-based engineering company Ivor Searle received a spot check visit from HMRC in early 2015. On inspection, it was found employee mileage claims were being estimated and could not be reconciled to fuel card invoices.
Companies don’t understand business mileage claims
A survey from YouGov has revealed that 56% of employees who drive a car for business purposes are unaware of the tax regime for reclaiming business mileage.
Businesses whose employees use a company car have a duty to report it to HM Revenue & Customs (HMRC), particularly if the company car is used for personal trips like driving to and from work.
The survey was commissioned by ABAX, a Norwegian-owned company which develops technology and products to support businesses and individuals who use a company car for work, by helping them to remain compliant with HMRC regulations.
The company now faces a potential fine for an incorrectly compiled business / private mileage log and the driver facing a full fuel benefit charge for just a small number of unaccounted for miles.
David Eszenyi, Operations Director for Ivor Searle, said: “It is something you don’t necessarily think about on a day-to-day basis when you are concentrating on the bigger picture of running a company.
“Our employees were manually logging their mileage in to a spreadsheet each month. The HMRC inspector noticed a small number of discrepancies in one of the mileage logs and alerted us to them.
“We employ around 110 people and as a medium sized business we don’t have someone specifically looking after our vehicle fleets, it is a combined effort. We now realise our understanding of the company car tax regime wasn’t as it should be and are taking steps to make sure it is in the future.”
Frank Ystenes, ABAX UK managing director, said:
“It is crucial business owners and employees understand the laws and ensure accurate records are kept otherwise the penalties can be high. The UK has a very complicated company car and car fuel benefit system in place, much more so than in Norway or Sweden.
“The survey also showed that 36% of employees update their mileage log less than once a fortnight, and this can leave room for error.
“ABAX’s products can help with this and bring companies savings of up to 20 per cent in terms of fuel costs and working hours, as well as ensuring they are compliant with the HMRC.”
It calculates mileage and distance, keeping businesses in line with HMRC regulations.
Need to know more about business mileage?
Visit our section dedicated to helping you understand business mileage