According to a survey carried out by TomTom, 47 per cent of businesses are not aware that they could be liable for any false mileage claims made by their employees. HM Revenue & Customs are clamping down on companies in order to get back some of the revenue lost as a result of fraudulent mileage claims.
According to HMRC it is the responsibility of the employer to ensure that all mileage claims made by an employee are correct and can be paid tax free. If a claim is found to be fraudulent, both the employer and employee are liable. Half of all businesses don’t check the claims for tax relief on mileage, although 72 percent of business owners suspect that their employees inflate their claims for tax relief.
The current amount for each mile is 45p for the first 10,000 miles and 25p each mile thereafter. An employer can pay up to the threshold for each mile tax free, but anything above the limit has to be declared as a benefit. If an employer pays below the threshold, an employee may claim the difference from HMRC. With 11 percent of employers believing that claims are routinely inflated, they may find themselves billed for thousands of pounds for unpaid tax.
A large number of companies fit vehicles with a tracker which records business mileage. This can be simply handed in to the business accountant periodically, with a copy provided for the employee. This saves time and unnecessary expense for businesses and their employees.
Download our free mileage claim form template, here.
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