A HMRC pilot study in 2011 found that 40% of small firms did not keep adequate business records, and one of the weakest areas is business mileage records. Around 60% of drivers claim for more business fuel than they actually use. HMRC is going to extraordinary lengths to find evidence of this in mileage records. Unaudited mileage puts fleets in double jeopardy. They overpay for business journeys and risk tax penalties going back six years.
One of the HMRC’s principal weapons are the new taskforces. These are specialist teams that undertake intensive bursts of activity in trade sectors and locations that the revenue believes represent a high risk of tax avoidance, evasion or fraud. The teams will visit traders to examine their records and carry out other investigations.
The taskforces target specific business sectors with chilling precision. So for example if you have a restaurant in South Wales or the South West, or a beauty salon in Northern Ireland, you really do need to make sure your records can bear inspection because taskforces have already been detailed specifically to focus on these sectors in these areas. 42 taskforces were in existence at the beginning of 2013. The revenue estimates that by the end of 2015, a total of £7.1 billion will be recovered from 60,000 companies.
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. In cases where overpayment is discovered, repayment of underpaid tax will be required from companies and employees. Combine this with the fines handed out for unsatisfactory record keeping and deliberate evasion, back taxes over a 6 year period regularly amount to six or even 7 figure sums for SME's.
Standardisation is the key to success in this minefield. Mileage and expense claims have always been a manual process. If 10 people are all given the task of recording their own mileage, it is more than likely that the task will be completed in 10 different ways. Each person has their own take on what is required. The one person that matters is the Tax Man. Only their method is correct and anybody acting outside of this standard will fall foul of the rules.
At ABAX, we continuously adapt our products to meet the requirements set by HMRC. We make sure that your business and employees cannot claim mileage in ways that do not comply with the latest revision to the standards set by the authorities. With the standards set by HMRC and a framework constructed by ABAX, all the business has to do is claim back what is owed. 10,100 or 1,000 employees will now all complete the same task in the same way.The difference is standardisation. The difference is ABAX.