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Can you use HMRC advisory fuel rates to work out mileage allowance?

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I was chatting with another practicing accountant, who told me in discussion that they work out a clients (self employed) mileage allowance using HMRC advisory fuel rates.

This is how he explained it to me.

 

They add all his fuel costs incured during the year; disallow private use %; divide the result by the advisory fuel rate to get the "business mileage".

 

Then, multiply the mileage by the the HMRC mileage rate of 45p / 25p to arrive at an amount, that they claim is legitemate business milege claim.

 

Is this correct? Or even legal?

 

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By Accountant A
29th Sep 2016 16:55

Assuming this isn't a joke, the "business mileage" is what it is and you don't derive it from other numbers. Are you saying that they have some random "private use %" that they apply absent any records of actual mileage? If so then, as far as I am aware, it is neither correct or legal (assuming that you mean for use in making returns to HMRC).

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Replying to Accountant A:
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By madhumorjaria
29th Sep 2016 17:25

Accountant A wrote:

Assuming this isn't a joke, the "business mileage" is what it is and you don't derive it from other numbers. Are you saying that they have some random "private use %" that they apply absent any records of actual mileage? If so then, as far as I am aware, it is neither correct or legal (assuming that you mean for use in making returns to HMRC).

Thanks for your response.

Exactly what I thought!

No, the question was not a "joke", but the accountant was dead serious that he was doing it correctly and it was a legitimate way of working out what his client could claim under travel expenses

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By pacta
29th Sep 2016 17:32

Done it.

It's akin to saying, right.. I have £4000 motor costs... what is my private usage %? ... er... 20%... that'll do. Disallow £800.

And don't tell me that you haven't done that either.

The actual records would of course be preferable but not many keep them. I don't particularly have an issue with an educated estimate.

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By Vaughan Blake1
30th Sep 2016 15:56

Reminds me of a partner at a friend's firm who (many years ago) produced accounts the final figure on which was derived, was the closing stock.

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