Staff business mileage claims must be verified
Published: 21 June, 2011
UK: HM Revenue and Customs is cracking down on companies in an effort to claw back unpaid taxes due on fraudulent mileage claims.
Nearly half of businesses do not realise they could be billed for thousands of pounds of unpaid tax if the claims are proved inaccurate, says a survey by fleet management specialist, TomTom Business Solutions.
Half of businesses do not routinely check the accuracy of their drivers' mileage claims and 72% suspect that their drivers regularly over-estimate mileage claims, the survey says.
More than one in 10 are convinced that claims 'inflation' happens routinely.
According to the HMRC, if an employer fails to check mileage claims properly, and their drivers inflate business mileage claims, they are in effect receiving tax-free AMAP or Advisory Fuel Rate expense payments for business miles that they did not commit and therefore owe tax.
An HMRC spokesman said: "Employers should have appropriate systems in place to verify that any business mileage claims made by their employees can be paid free of tax. Should such claims turn out to be false, both the employer and employee may be liable to action taken by HMRC."
Implementation of affordable fleet management technology can ensure companies do not fall foul of HMRC's tax requirements commented Giles Margerison, director, UK & Ireland for TomTom Business Solutions.
"For businesses who want to mitigate their risk, vehicle tracking provides foolproof evidence of exactly how many miles were travelled, by whom and when to validate mileage claims. Detailed mileage expense reports can be generated at the touch of a button and exported directly into company accounts, minimising time-consuming administration," said Mr Margerison.