Fleets face six-figure tax bills on mileage claims

Businesses are being warned of a tax crackdown on mileage claims after a series of investigations into fuel and mileage payments.

Mileage audit firm TMC says it has identified five companies in the past month that are being investigated by Her Majesty’s Revenue and Customs (HMRC).

A bill for more than £700,000 in back taxes could be at stake for one of the businesses involved.

“Investigators see the whole area of mileage as low-hanging fruit in the current climate,” said Paul Jackson, managing director of TMC.

He believes that more fleets could find their records being scrutinised by HMRC as it hardens its line on incomplete or inaccurate mileage records.

In the cases seen by Fleet News, HMRC contends that the employers failed to check mileage claims properly.
Drivers were therefore able to overstate their business mileage and in effect received tax-free AMAP or Advisory Fuel Rate (AFR) expense payments for business miles they didn’t cover.

One tax inspector spent three weeks using an online route planner to check hundreds of mileage claims made by just eight drivers.

In practice, HMRC normally would look at the past six years, but in this case it examined the company’s records over the past four years, revealing some serious inaccuracies.

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