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Half of drivers fail on business mileage tax rules

Published 27 April 2015

More than half of company car drivers are ignorant of tax rules on reclaiming business mileage, according to a YouGov survey.

Businesses whose employees use a company car are required to report it to HMRC, particularly if the vehicle is used for personal trips like driving to and from work.

Companies must keep mileage records to show how their vehicles are being used. If the company doesn’t provide free fuel for private use to company car drivers its records must prove it.

It means drivers must record ‘to’ and ‘from’ locations, the reason for the journey and the number of miles travelled

But Fleet News reports that the survey, which was commissioned by ABAX, found 36 per cent of employees update their mileage log less than once a fortnight, leaving companies potentially exposed to inaccuracies, while 56 per cent were anaware of the rules relating to tax.

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.”

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.

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 tax regime wasn’t as it should be and are taking steps to make sure it is in the future.”

One of ABAX’s products now used by Ivor Searle drivers is an electronic Triplog which automatically documents all driving via GPS, calculates mileage and distance, keeping businesses in line with HMRC regulations.


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