Companies unaware of mileage tax liability, according to TomTom research

London, June 11 2011
Almost half of businesses operating vehicle fleets are unaware that they could face tax bills for thousands of pounds if staff mileage claims are inaccurate, a study has revealed.

Her Majesty's Revenue and Customs (HMRC) is cracking down on companies, large and small, in an effort to claw back unpaid taxes due on fraudulent mileage claims.

An HMRC spokesman commented: 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 don't fall foul of HMRC's tax requirements.

According to the survey, commissioned by fleet management specialist TomTom Business Solutions, 47 percent of businesses don't yet know about the initiative or the fact that they could be billed for thousands of pounds of unpaid tax if the claims are proved inaccurate.

The research also reveals that while 50 percent of businesses don't routinely double check the accuracy of their drivers' mileage claims, 72 percent suspect that their drivers regularly over-estimate mileage claims.

More than one in ten (11 percent) are convinced that claims 'inflation' happens routinely.

In today's tough economic climate, taking a harder line on business mileage claims could net the HMRC significant additional tax revenue said 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 admin. Moreover, employees also benefit from the technology by reducing their administrative burden. They no longer have to complete mileage expense reports and also benefit from tools to improve their working day and to make for safer working conditions

Click here for advice from TomTom Business Solutions' Giles Margerison on how technology can help businesses validate mileage claims and provide an audit trail.