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New rules on mileage claims?

New rules on mileage claims?

A friend has been advised by his accountants that from Jan 1st HMRC require petrol receipts retained as additional proof even where the 40p/mile actual mileage calculation is used. I understood as long as the actual mileage was accurately logged (and could be if required, corroborated), actual fuel expenditure is NOT required. Now it seems they want both??

Has anyone else come across this?
Gerard Somers


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30th Dec 2005 10:59

Lost an ECJ case
A few months ago HMRC lost a European Court of Justice case regarding fuel not being supplied direct to the business (the employer). Just shows how ridiculous European legislation has become.

At first it appeared as if no VAT would be recoverable at all, and so UK legislation was altered such that receipts would be necessary.

See link Recovery of VAT by businesses on fuel purchased by employees

Once again yet further red tape for hard pressed businesses to deal with!!!

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31st Dec 2005 18:23

Yes, but only for VAT input claims by employers.
As far as claims to allowable expenses against income tax, in my view HMRC cannot require but can only request that petrol receipts be retained.

In the final instance, the arbitors of fact as to whether ANY allowable expenses have been incurred are the Commissioners.

I would be very surprised indeed if any body of reasonable Commissioners did not accept a contemporeaneous record of business mileage and an expense at 40p/mile.

I shall certainly not be advising my clients to keep all petrol receipts in addition to a record of business mileage where the 40p/mile is claimed. I appreciate that the mileage allowance is non-statutory, but this does not affect in any way the question of whether an allowable expense has been incurred.

HMRC may of course try to argue that prime records (ie petrol receipts) have not been retained as legally rquired by TMA 1970, but then by that token ALL car expenses should also be retained. It also makes a nonsense of the whole idea of the mileage allowance. I think they would get short shrift arguing that one before the Commissioners.

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05th Jan 2006 08:52

MPs Mileage Claims
Why is it that MPs do not have to prove their business mileage? They just submit the amount and it is paid. Is it is because they are 'Honourable Gentlemen'!!!!

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04th Jan 2006 19:05

Need a Company Car?
In claiming VAT inputs on a pro-rata basis we have noticed that it discourages overly creative mileage claims something that cannot happen if inputs are not claimed, this is because car odometer mileage is recorded on the fuel receipt for TCO logging and at month end for the claim itself.

TCO spreadsheet (Total Cost of Ownership) values are logged because private car ownership is very expensive, over 50% tax will have been paid on earnings for a new car. A car at 15,000 needs over 30,000 in earnings to pay for it.

It’s the least that can be done for a vehicle that is used for company business and should be treated like any other ‘company asset’ that has running costs and depreciation. The TCO is very scary, but saves money in the long run as it justifies the cars replacement or the need for a company car. MPG, fuel, insurance, road tax, credit and maintenance costs are all logged or calculated.

Perhaps if HMRC see the true cost of car ownership they may allow more than 40/25p per mile to be claimed? A lot of employees are subsidising employers, especially goverment employees.

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04th Jan 2006 14:06

2 separate taxes - direct and indirect
are involved potentially re records for car mileage claim.

As John notes, the info put out by HMRC (for which read C&E) relates to new need to keep petrol receipts to cover the VAT element (if reclaimed) of the fuel/mileage allowance, because they lost the EU case on the point. This requirement is SOLELY for VAT reclaim purposes.

If client is not reclaiming VAT on fuel, there is no new requirement to keep receipts for any car expense, just the mileage record/log ; the position of HMRC (for which read IR) has not changed.

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