HMRC announces £120 million drive on tax records

HMRC has announced that it 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 APA Director General, Gareth Osborne..

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 and 11% were so bad they would be referred to the tax authorities for further investigation. In many cases, such probes lead to large bills for unpaid tax, plus fines and interest penalties.

Osborne believes that mileage is one of the weakest areas of a business’s statutory reporting, especially where the operator has a large grey fleet (people who claim for using their private vehicle for business use). Here many mileage claims were found to be overstated or clearly fraudulent and would result in fines of up to £18,000.

“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.”

APA will be addressing this issue and finding solutions for PAs who claim mileage but also for their bosses and the fleet they control.

APA