Employee AMAP claim eligibility- insurance cover

Are HMRC outside scope here?

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HMRC have started review for a Limited Company under 24(1) Sch18 Year ended 31 March 2021.   Problem is that the accounting records are first class and to date HMRC have found nothing- just a pair of spectacles for close work- client has already remitted the relevant CT plus a bit of (estimated) interest.  No problem there.

Directors maintain full mileage records for the one car and take refunds monthly- such (excellent) monthly mileage records inspected by HMRC.  Annual true business mileage from business premises and return fully recorded- mileage approx 5,000 so 45p per mile in order.  Fully corect and complete. No problem there, either.

Now the query.... HMRC wanted to see the car insurance schedule to ensure business use was covered (it was).  Stated that if business use not on the schedule then AMAP would be disallowed in full.

My thoughts are this is outside scope of HMRC- the business use cover is in contract with the insurers.  A qualifying business trip fully recorded is fully deductible for Corporation Tax. Any comments?

Aside- a timely reminder to warn clients claiming AMAP to have business use on the policy else it could be problems in the event of a claim whilst on business travel!

 

 

Replies (8)

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By David Ex
18th May 2022 11:29

Have they checked the MOT and looked at the tread depth on the tyres?

Not having any knowledge of the underlying legislation, the only point they might have is that the AMAP (presumably) includes the cost of insuring the vehicle for business use.

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Replying to David Ex:
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By WallyGandy
18th May 2022 13:06

AMAP does cover insurance (plus fuel, road tax, repairs & depreciation). HMRC manuals silent about business use and insurance. Rightly so.

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By rmillaree
18th May 2022 11:34

I am gobsmacked that hmrc are going down this route i must admit - i would strongly resist and request they provide written proof their request for information is not outwith the relevant guidance in the employment income manual. Its a nice position to be in knowing its not an issue if it does need to be provided makes it easy to try and tell em to naff off.

Futhermore are hmrc even right in any assertion that the business use they use as yardstick is what the insurance company will also use - i would presume all home to site travel that would be allowable may not necessarily require business use insurance if its just travel to and from work as far as insurance companby is concerned?

Hey ho they may be perhaps right if the use is not lawful there could be something i am missing here along the lines of parking fines.

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Replying to rmillaree:
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By WallyGandy
18th May 2022 13:05

I have already (politely) told HMRC to [***] out- it's not relevant to them about insurance cover. As long as any home to business is excluded it's allowable. They're just miffed they can't find anything..... But if an employee is using his/her car for an employer.... it's business use for motor insurance. That will affect the premium, but it's up to the employee to consider the risk in the event of a claim.....

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Replying to WallyGandy:
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By Hugo Fair
18th May 2022 14:26

I'm not sure that it's only the employee who needs to "consider the risk".
I was told by HR, admittedly about 10 years ago, that the employer would be held as legally liable if employee had invalid insurance whilst engaged on mileage on behalf of the business (and same goes for if car was unroadworthy or lacking MoT).

Nothing to do with taxation (let alone HMRC), but worth checking up on?

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Replying to Hugo Fair:
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By WallyGandy
18th May 2022 15:00

Good point for others, Hugo- but this is a 2-Director Private Company. Hence same horse different jockey... and the same pot!

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By David Ex
18th May 2022 13:14

Probably highly unlikely but guess in theory client could be reported for insurance failures.

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Replying to David Ex:
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By WallyGandy
18th May 2022 15:06

In reality he could. Any claim whilst on business travel would be rejected without business cover. Driving for business purposes always requires business cover. My car is thus insured. My wife's not- as long as her "prime purpose" is domestic travel and she just gives me a lift as passenger when visiting family in same area (I must not be driver) then our insurance company eventually agreed. After a lot of huffing and puffing.....

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