Companies with fleets of vehicles on the road have an obligation to make sure their drivers are correctly licensed and safe at all times. However, they also have an added responsibility to make sure their drivers understand the HMRC rules about mileage and reporting. There are very specific legal requirements for tracking company car use in the UK.
Fleet News UK reports that a new survey from YouGov indicates a significant amount of ignorance among company car drivers insofar as tracking is concerned. Just 44% of the drivers surveyed were familiar with the rules for reclaiming business mileage. This leads to improper reporting among drivers and, inevitably, among employers who are then forced to estimate mileage for the purposes of HMRC reporting.
The law requires companies to differentiate between miles driven for work-related purposes and personal miles among drivers who use company cars for both. Personal miles would include driving to and from work or running errands that were not directly related to one's employment. In some cases, companies cover all the fuel expenses regardless of the mileage driven. In other cases, workers are required to pay for any fuel related to personal driving. This is where the confusion seems to be.
When the HMRC conducts a spot check on a company with its vehicles, it requests to see mileage records and fuel receipts. When the two do not match, it is assumed that the driver is improperly recording mileage. In one such case mentioned by Fleet News UK, a few seemingly minor discrepancies left an employer with a potential fine and a driver with back taxes and penalties due.
Keeping Accurate Records
There is a key lesson to be learned here for both companies and drivers: keeping accurate records is essential. We already know how important it is for companies to pay attention to driving licences, including running regular licence checks on their drivers from time to time. Nevertheless, companies also need to be proactive in terms of mileage tracking and reporting.
While most errors discovered by HMRC are the result of carelessness rather than purposeful fraud, any such mistakes can be financially costly. Companies are far better off developing a reliable system for mileage tracking and reporting rather than risking being out of compliance.
Fleet Licence Check does not help clients with mileage tracking and reporting, but we do provide a comprehensive claims handling and licence checking service. Insofar as licence checking is concerned, we have direct access to official databases allowing us to run licence checks and return the results directly to our customers. We currently run about 20,000 checks annually.
Checking the licences of your drivers will become more important when the paper driving licence counterpart disappears later this year. Rather than waiting until that happens, consider implementing a licence-checking programme right now. We can run one off checks for you or implement a comprehensive claims handling and licence checking programme for the long term. Contact us for more information.
1.Fleet News UK – http://www.fleetnews.co.uk/news/latest-fleet-news/2015/04/24/56-per-cent-of-company-car-drivers-unaware-of-hmrc-business-mileage-rules