Are your mileage expense records HMRC compliant?

Everybody wants to be on the right side of HMRC. Getting your business records in check is paramount to ensuring you don’t get a knock on the door for your business.

One area that is being put under HMRC’s magnifying glass is mileage records. By keeping a closer check on your business’ mileage claims you can also fish out any employees committing expense fraud and save your company money on potentially inflated claims. It goes without saying that these records need to be kept meticulously. HMRC aim to visit businesses every 6 years to carry out Employer Compliance Assurance visits. So it is worth understanding how to keep your records in tip top shape.

What records should you keep for mileage claims?

The date of travel for the claim should be recorded as well as the total mileage for the individual with the precise location recordings. It is desirable to actually have postcode-to-postcode details. One big mistake that employees make is rounding up their mileage distances.

The second mistake that employees make is including their commute to work in their expense claim. HMRC do not consider commuting to and from work to be reimbursable. Therefore, it may be wise to keep an eye out for consistently similar journeys to make sure employees are not including these.

Another important aspect to be aware of is HMRC’s Mileage Allowance Payments (MAPs). It is important to keep records of employee’s work mileage if they use their own car. How much you pay your employee per mile is up to you but you must be aware of the HMRC’s MAPs to see if you need to declare earnings or not.

Last, but not least, it is important to record the reason for the journey and whether any additional costs such as parking tickets or tolls were incurred. Knowing the exact nature of the journey can ensure that employees do not claim for non-business journeys. HMRC do not take kindly to employees claiming for private journeys. If this is the case, substantial fines and penalties may follow.

It may sound like a lot of daunting information but there are precautions you can take to keep yourself on the right side of HMRC. One way to do this is to employ an automated real-time expense process. Companies using ExpenseIn can enforce automated policies in line with HMRC regulations. This can safeguard against any fraudulent claims by eliminating employee interference.

For mileage claims, employers can set policies such as needing to include postcodes. Our system can automatically calculate the distance between the postcodes using Google Maps. To take into consideration instances such as traffic, you can also set mileage distance tolerances so your employees have to be within a certain percentage of our calculated distance.

If an employee’s claim is not inline with the policies then this will be flagged up when they go to submit their expenses. It will explain why the claim is invalid so that the claimant knows exactly how to rectify it. As this process is automated it takes the hassle out of scrutinising expense claims once they have been submitted.

You can also configure your account with your company’s custom fuel rates. HMRC like to check that you are keeping tabs on employees who have exceeded 10,000 miles annually in their own car. With our system, you can enable mileage limits. When they have exceeded their mileage allowance, employees will no longer be able to access certain rates.

ExpenseIn is HMRC compliant so you will always stay in their good books. In fact, as HMRC are going digital it is wise to make sure you are using an automated system that can keep thorough digital records of all of your expenses.

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