Senior tax experts claim HMRC officials are becoming increasingly strict on fleets, with one unnamed medium-sized firm charged £3.5 million for not running its opt-out scheme properly.
According to Harvey Perkins, director of accountancy firm KPMG, there has been a fundamental shift in the way HMRC investigates fleets on record-keeping, with the more strictly regimented national experts taking over, rather than regional tax officials making individual, locally-based decisions.
Company cars and employee car ownership plans (ECOPs) have become a key focus for attention alongside self-employment and severance pay tax following a National Audit Office report on employment tax concluded that HMRC had to become more efficient at collecting revenue.
According to insiders at HMRC, it has lost patience over the number of ECOPs that are not being properly run.
Perkins said: ‘HMRC is taking a far more commercial approach. New structures are targeting sectors where there seems to be a lot of poor record keeping and HMRC is drawing battle lines.’
This increased attention on fleets stretches beyond payments for fuel on private mileage and ECOPs to business mileage pay-and-reclaim.
Poorly kept business mileage records are under scrutiny. Perkins says fleets need to have accurate records detailing mileage and purpose of trip as well as start and finish locations.
Car tax expert Alison Chapman, a partner at Deloitte, agreed that HMRC was getting much more scrupulous in checking that fleets were maintaining accurate records, to ensure employers and employees were paying the correct levels of tax.
She said: ‘Ignore this at your peril. There’s been a general tightening up at HMRC, which started even before the merger. It’s possible it was previously understaffed but now more expertise is being allocated in that area. Historically, there was some leeway for local tax officers but business has changed and there are now more rules and regulations. Fleets need to keep stricter records and be better organised.’
Perkins claimed that HMRC hit-squads were picking apart ECOP schemes and he is increasingly seeing many poorly-run schemes unravelling.
The HMRC does not have to prove wrong mileages are being claimed by employees, resulting in not enough tax being paid. The onus is on the fleet to prove it has paid the right amount and Perkins warned that bills for a lack of accurate records could run into thousands, or even millions, of pounds.
However, an HMRC spokesman claimed there was no specific new campaign targeting fleets and that it was ‘business as usual’ regarding the investigation of poor record-keeping.