Businesses are being given tips on how to avoid fines of up to £3,000 per employee from HM Revenue and Customs (HMRC) for inaccurate tax returns due to erroneous mileage records. Firms that utilise company-owned vehicles for business travel are required to report the usage of these vehicles to the tax authority, keeping accurate mileage records to demonstrate business vs private mileage usage. The minimum reporting requirement demands that business owners include data regarding the date of travel, the reason for the journey, the number of miles travelled and the locations travelled between. Additionally, any claim must identify the vehicle used and the type of fuel to tie in with the amount claimed. In the event a company does not provide free fuel for private usage of company vehicles then the records must reflect this. Last year, a survey on business mileage claims discovered that more than half (56 per cent) of company car drivers were in the dark regarding HMRC rules on reclaiming business mileage. More than a third (36 per cent) of employees update their mileage log less than once a fortnight, leaving many businesses potentially exposed to inaccurate data which could cost them dearly. With HMRC becoming ever stricter regarding this area of business expenses, FuelGenie has supplied business owners with the following tips to help them understand the laws and reinforce the importance of accurate record keeping:
- The use of fuel cards can more accurately and cost-effectively monitor mileage and fuel use per driver. Some fuel cards also provide itemised VAT invoicing with a breakdown of all fuel card transactions to enable customers to reclaim business fuel VAT in full.
- GPS Technology, telematics and smartphone apps can be used to help track the time used for business vs private mileage.
- Distribute clear, concise guidelines to those claiming mileage to set expectations regarding what is acceptable and what is not acceptable, including the severe consequences of committing mileage fraud.
- Implement an approval process so that line managers can check claims before they are paid out. Approvers should also be given clear guidelines as to what they should be checking for i.e. weekend travel and rounded-up mileage.
Conduct regular reviews of your business mileage processes. Continue to ensure you and your employees are applying the correct legislation and mileage rates and maintain systems in line with technology and legislation developments.