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Claiming backdated mileage expense for 4 years

Claiming backdated mileage expense for 4 years if over 2,500

Could someone help me with a slightly complicated employment expense situation.

New client has not claimed the difference between 45p/25p  and the re-imbusred amount from his employer for last 4 years.

There are 2 issues. The ownership of the car is quite complicated. He works for a major car manufacturer and he changes his car regularly buying new cars from the company using an interest free loan from the car company to pay for the car. His P11Ds for the last 4 years shows the interest due on the loans for each purchase as a benefit in kind  in Box H of the P11D.

In 14/15 and 15/16 the car company paid the insurance and road tax on the car for him (which was taxed on his P11D). In 16/17 and 17/18 the company paid the insurance and road tax again BUT the employee re-imbursed the company for these 2 items so no BinK.

The second issue is the reclaim for mileage. Assuming he has a claim for the difference between the 45p/25p and the re-imbursement I understand he can go back 4 years. The problem is that in some years the claim is bigger than 2,500 and he hasn't registered for self assessment.

14/15 30,000 miles. Claim 9,500 less 6,000 re-imbursed = 3,500

15/16 7,000 miles. Claim 3,150 less 1,400 re-imbursed = 1,750

16/17 20,000 miles. Claim 7,000 less 4,000 re-imbursed = 3,000

To claim for the 14/15 and 16/17 years which are greater than 2,500 I believe he has to register for self assessment. But if he registers for self assessment from 14/15 I worry he will incur fines for late filing?

Any ideas how one should proceed?

Many thanks

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15th Dec 2018 18:57

On your question, he has not (yet) filed late.

The rest seemed to me to be background, so I haven't thought about the basis of your claims. What you say in that regard might be right, but in your place I'd check.

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to Tax Dragon
15th Dec 2018 18:59

Tax Dragon wrote:

On your question, he has not (yet) filed late.

Just to clarify, I don't mean he hasn't filed late because he hasn't filed. I know I can be petty but give me some credit! I mean he hasn't missed any filing deadlines.

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to Tax Dragon
16th Dec 2018 08:16

Tax Dragon wrote:

Just to clarify....

No need to worry, TD, everyone else has done that for you.

Thank you everyone.

And I like SteLacca's comment on another thread: you can't be penalised for not doing what you don't have to do. It would be strange indeed if then you were penalised for doing what you didn't have to do. Unless of course that thing is unlawful. And, last time I checked, submitting tax returns was not unlawful.

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15th Dec 2018 20:25

You don't need to do this through self assessment - you can can make a claim for tax relief on employment expenses separately for the past four years here by completing a P87 form:

https://www.gov.uk/guidance/claim-income-tax-relief-for-your-employment-...

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15th Dec 2018 23:15

Don’t think he can use a P87 because some of the claims are over 2500.
If he registers for SE now for 15/16 and submits a return for expenses now for 15/16 won’t that be deemed to be a late filing and so subject to penalties .. or doesn’t it quite work like that?
Thanks

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to arthurallan
16th Dec 2018 00:37

Good point, should have paid attention to the amounts involved.

He's not been issued a notice to submit a tax return though, so can't get late filing penalties - if asked to do so now, surely he'd get 3 months from the date of issue?

I would simply write to HMRC with the details of the claim. He's within the 4 year time-frame for making such a claim.

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to arthurallan
16th Dec 2018 10:51

.

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By Matrix
to arthurallan
16th Dec 2018 07:38

No penalties unless a notice to file a return was issued. Find out how all the claim companies do it, the ones which say they can get you big reclaims.

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16th Dec 2018 07:04

1. Are you happy that the mileage log is robust enough for the detailed scrutiny your claim will trigger?
2. I would want to research whether being able to claim a tax allowance in respect of mileage elevates the loans to a qualifying purpose = which would cancel any BIK.
3. I see no need to register for SA returns unless they issue them. There are no late filing penalties unless returns are issued and are not filed until over 3 months later, and the result of the return is an unexpected liability.

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16th Dec 2018 07:45

I’d just make the claim and see what HMRC do. If they say he needs to do SA, there won’t be any penalties for late filing. Warn the client of the process so any HMRC letter to him isn’t out of the blue.

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16th Dec 2018 19:37

Many thanks
The mileage log is very detailed - every journey is listed an verified by the employer on weekly claim sheets.

Don't quite follow Marions point

"I would want to research whether being able to claim a tax allowance in respect of mileage elevates the loans to a qualifying purpose = which would cancel any BIK"

My understanding is that he buys the car from the car manufacturer he works for on an interest free loan from the company; the deemed interest is assessed as a BinK on his P11D which lists each car and dates in detail calculating the interest on a daily basis.

I haven't come across this type of arrangement before and have asked my client to confirm ownership of the car passed to him in each case so that he can claim the 45p net of re-imbursements of between 15p and 25p because he was using his own car on business

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17th Dec 2018 09:19

Client has confirmed ownership of the cars were in his name which means I think that I can go ahead and process the mileage claim for him.

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