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Insight: 10 ways to capture mileage

With HMRC taking a tougher stance on accurate mileage record-keeping, it's important to have a robust system in place. Here we assess the different ways of capturing mileage.

Mileage capture: why bother?

  • HMRC compliance and avoiding potentially hefty fines for inaccurate mileage records.
  • Reduction in business mileage – experts predict a 25% reduction.
  • Potential to switch from paying AFRs (Advisory Fuel Rates) to an exact pence per mile to cut fuel bill.
  • Taxation benefits such as better VAT reclaim and the potential to link mileage to subsistence allowance
  • Time and admin saving for drivers, especially if details are prepopulated.
  • Time and admin saving for company, particularly if a third party carries out mileage audits.
  • Can support CO2 reporting and reduction targets.

Option 1: Handwritten logbook

How it works

A logbook is kept in the vehicle, with the driver jotting down their business journeys. It sounds outdated, but many companies still take this no-frills approach. Paul Jackson, managing director of The Miles Consultancy (TMC), says: “We frequently see this; 25% of the companies we come across are still using pen and paper.”

Pros

The most basic and cheapest option and may suit drivers who do not have frequent access to an office computer such as van drivers.

Cons

Potential for inaccuracy, there may not be space to record sufficient detail and it is not possible to run reports. Logbooks may go missing.

Option 2: Spreadsheet

How it works

One step up from a handwritten logbook, this sees drivers logging mileage electronically. Aa spreadsheet is the biggest competitor to a dedicated mileage capture system, although the larger the fleet the more onerous it becomes because of the admin required to keep up-to-date. Therefore, it benefits smaller fleets. 

Pros

Inexpensive as most companies have Microsoft Office and easier for admin than handwritten logbooks.

Cons

Like logbooks, spreadsheets are prone to inaccuracies and onerous. “It’s very easy for drivers to add fictitious journeys or inflate business mileage,” says Jon Mackeny, head of consultancy for Allstar.

Option 3: Online mileage capture

How it works

Although HMRC doesn’t require postcodes, it is considered good practice and these systems typically work by drivers logging in, verifying their vehicle’s details, entering ‘from’ and ‘to’ postcodes and the reason for the journey.

Drivers also record their odometer reading which enables the system to calculate private mileage for reimbursement if they are using a fuel card. Text message or email reminders are sent to drivers.

Systems are available from dedicated providers like TMC, Midas and Vertivia, or from fuel card companies and leasing and fleet management companies.

It typically costs £1 per driver per month depending on the level of service and reporting required.

TMC will handle auditing and driver communication, in addition to the online mileage capture system, for £3 per driver per month.

Mileage Count offers a different payment model with a flat fee of £5 per month per company (not per driver) for its starter level package.

The other levels (‘premium’ and ‘ultimate’) have a charge per driver per month, in addition to the flat fee.

“At the premium level the system is linked to Google Maps,” says Steve Clarke, group marketing manager at Mileage Count. ‘Ultimate’ is a full fleet management package.

Pros

More accurate and sophisticated than a spreadsheet or paper-based logbook, reduced administration, many claim to be HMRC-compliant, potential to switch from AFR rates to drivers paying actual fuel, grey fleet checks can usually be built in.

Cons

Still relies on drivers inputting journeys and providing odometer readings; odometer readings can be affected by variations in tyre pressure and wear; and the systems don’t cover all scenarios.

“The next step is to have holidays built in to make sure people aren’t doing mileage on holiday,” says Jackson.



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Comments

  • Alastair kendrick - 26/02/2013 20:06

    What evidence is there of more HMRC activity and increased charges of penalties.? I am an employment tax specialist who spends his day dealing with issues. Of this sort and also a ex inspector of taxes and I see no increased activity in this area. I really feel this is being suggested by the mileage capture industry. It is of course to ensure robust systems are in existence. In experience this means tightening the controls through the existing expenses system without starting with new systems

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  • Proof - 28/02/2013 07:48

    Alastair, up until a year ago our business came from telesales and word of month. But over the last year we have had 71 new customers on the back of a HMRC audit and the first thing they looked at was Mileage records. If this does not say what the above does......
    "low hanging fruit" HMRC's words (Quote)

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  • 3 of the big 4 can confirm this - 28/02/2013 09:00

    They have also seen this over the last 12 months

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    • Alastair kendrick - 04/03/2013 07:57

      Whilst it is important that employers have proper controls in p lace and at the time of an HMRC inspection this will be reviewed it is not the case that this is an area of specific attention by HMRC. It does not feature in their list of compliance projects or indeed I n their list of issues checked at a compliance fruit. I accept the low lying fruit point

      HMRC carry out a significant number of employer compliance reviews and the % in which mileage capture is highlighted is still low. In many instances HMRC will not even if records are poor seek a financial settlement in this regard.

      It seems this being marketed well by certain organisations (including big 4) and employers need to not run scared but ensure they have robust controls in place ideally in their expenses systems

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  • John Cooley - 18/12/2014 17:19

    very useful especially with dongle but no mention of integration with account software such as SAP

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