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FuelGenie gives its top tips on recording business mileage to avoid HMRC fine

FuelGenie is offering tips to help businesses avoid being fined up to £3,000 per annum per employee for an incorrect tax return due to inadequate mileage records.

Companies that utilise company-owned vehicles for business are required to report the usage of these vehicles to the HMRC and must keep mileage records to show business vs private mileage usage. As a minimum, records need to include information regarding the date of travel, the reason for the journey, number of miles travelled and locations travelled between. In addition, the claim will need to identify the vehicle, type of fuel etc. to tie in with the amount claimed.  If the company does not provide free fuel for private usage of company vehicles then the records must reflect this.

A recent survey conducted on business mileage claims found that 56% of company car drivers are unaware of HM Revenue and Customs (HMRC) rules on reclaiming business mileage. More than a third (36%) of employees update their mileage log less than once a fortnight, leaving companies potentially exposed to inaccuracies.

As HMRC becomes more stringent regarding this area of business expenses, it is crucial for business owners and employees to understand the law and ensure accurate records are kept. 

The following tips are designed to help improve business and private mileage record keeping:

  • Fuel cards can offer businesses a cost effective method to more accurately monitor mileage and fuel use per driver. By using a fuel card, employees can fill up with no cost to themselves and keep track of mileage at each stop. Some fuel cards offer itemised VAT invoicing with a breakdown of all fuel card transactions so customers can reclaim all of their business fuel VAT.
  • GPS Technology, telematics or smartphone apps can be used to help track the time used for business vs private mileage. While these systems still rely on drivers identifying the nature of the journey (business or private) themselves, implementing such systems can help guard against late and incomplete records of each journey taken when compared to a more manual system.
  • Develop and issue simple yet concise guidelines to those claiming mileage in relation to what is expected, what is acceptable and what is not acceptable. Also ensure employees are aware of the consequences of committing mileage fraud.
  • To ensure more accurate claims, implement an approval process. Operated by the management team or line mangers with knowledge of the driver, they are responsible for checking claims before they are paid out. It is important to give guidelines to these approvers as to what they should be checking for, such as travel at weekends, mileage claims being rounded up, traveling to the same places too often per week, late claims, missing information and duplicate claims.
  • Review your approach to business mileage regularly. Things change, from technology and legislation to employees and vehicles. Check your drivers are claiming mileage for the right type of vehicle. Continue to ensure you are applying the correct legislation and mileage rates. Be certain that you are paying or being reimbursed the correct rate and your systems are regularly updated.

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