Her Majesty's Revenue and Customs (HMRC) will check the mileage records of thousands of small fleets as part of a drive to boost revenue collection by £120 million over the next three years.
The plan was outlined in an HMRC review document published in February.
The move underlines the pressing need for businesses to keep detailed and accurate logs of business journeys, says Paul Jackson, managing director of fuel and mileage specialist, TMC.
HMRC plans to carry out Business Record Checks (BRCs) at 60,000 SMEs between now and 2015.
BRCs are designed to identify companies where statutory record-keeping is unsatisfactory. The idea is that the firms can put their house in order instead of submitting inaccurate tax returns.
A pilot study run by HMRC last year found that 40% of firms’ records weren’t up to scratch.
However, 11% of companies’ records were bad enough to warrant further investigation by the tax authorities. In many cases, such probes lead to large bills for unpaid tax, plus fines and interest penalties.
Jackson said that mileage is often one of the weakest areas of a business’s statutory reporting.
“You need to be able to show that your business collects sufficient detail on business journeys. That means recording the date and purpose of trip, the start and finish points and accurate mileage,” he said.
“The Revenue will also check whether you audit your drivers’ expense claims regularly and correct them if necessary to prevent overpayments. Overpaying is tantamount to providing private fuel and carries a big liability for tax and National Insurance.”
To help smaller companies to comply with their statutory expenses reporting obligations, TMC has developed a small-fleet solution called TMC2. This version of TMC’s widely-used mileage capture and audit solution is designed for the needs of businesses with 1-100 vehicles.