HMRC’s enforcement of an expenses checking system on the haulage industry is “not fit for purpose” and will “burden employers and employees, the Road Haulage Association (RHA) says, as it engages in a standoff with HMRC over the sleeper cab allowance.
The Revenue insists that from 6 April employers in the haulage industry will be required to do random sampling of drivers' receipts for costs incurred when they're away on an overnight job, as P11D dispensations no longer apply for the overnight rate.
Jack Semple, RHA director of policy, however, is willing to contest the decision at a tax tribunal. “HMRC says it's a legal requirement from April this year. We say it's not. We cannot accept HMRC's position, we will not accept it.
“We're going to contest it at the earliest opportunity in the tax tribunal system, but it would be far better if HMRC simply accepted that a bespoke allowance without this additional burden is appropriate to the unique circumstances of road haulage.”
Dispensations phased out
Employers will still be able to pay the £26.20 standard rate overnight subsistence allowance to employees using the sleeper cab, to cover the cost of food while away from home and the upkeep of the cab.
But HMRC has instructed employers from April to install a checking system to ensure some expenses are incurred as a result of the employee being away from home working overnight and for the driver to retain receipts (or take a photo on their smart phone), driver’s log sheets or any other evidence for the period of the checking system to support their claim. HMRC has published guidance but there is no specified method for checking systems.
The RHA claimed HMRC has reneged on its original agreement, where the haulage industry was not required to obtain receipts from its workers, it just needed to know that the driver was in a subsistence position and incurred a cost.
No legal basis for this decision
Alastair Kendrick, Macintyre Hudson tax director and RHA tax policy adviser, told AccountingWEB that HMRC has no legal basis for this decision: “The legislation [ITEPA 2003 s 289A] doesn't require the need to keep receipts. It just needs the evidence that it was a cost incurred in a subsistence position,” he argued.
Furthermore, Kendrick has branded policy change which came out of a review by the OTS on travel and subsistence as "not simplification but complication and administrative burden on employers and employees". He added: “The sampling process that [HMRC] talks about on their website is confusing and not really fit for purpose for the haulage industry. But effectively it's a sea change in practice which will cause more administration,” said Kendrick.
Situation has gone from bad to worse
The situation between RHA and HMRC has gone from bad to worse. HMRC caused confusion to the haulage industry last March when it announced incorrect advice on GOV.UK over the withdrawal of the round sum allowance. HMRC has since apologised for the misunderstanding but is still determined to change its practice. Kendrick said the RHA has been “going round and round in circles” to get an understanding of what HMRC wants and whether it will work for the industry.
An HMRC spokesperson told AccountingWEB: “The new arrangements are simple to operate. All employers have to do is carry out the checking of information that they or their employees should already hold as a matter of course. We are working closely with the industry to ensure that employers can adopt these new rules quickly and easily.”