HMRC error causes tax allowance confusion

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Accountants are incorrectly telling their haulage contractor clients that their dispensations will no longer exist in April because HMRC has failed to update its website, the Road Haulage Association (RHA) says.  

The RHA has an agreement with government over the payment of a round sum allowance to those drivers who use sleeper cabs whilst on a business journey. However, the government’s repeal of P11D dispensations for expenses from 6 April has caused confusion over the tax allowance.

Alastair Kendrick, Macintyre Hudson tax director and RHA tax policy adviser, has assured AccountingWEB that along with the RHA, they have procured HMRC’s approval in extending the existing arrangement. “I have a letter on my desk from the Treasury that says the change in April 2016 does not affect lorry drivers’ expenses,” Kendrick said.

Under the agreement, HMRC has agreed rates paid to drivers, free of tax and national insurance, as long they are away overnight in their cabs – in a genuine subsistence position.

Despite the arrangement, HMRC has approached hauliers and informed them that their dispensations will no longer exist from 6 April, and advised that they apply for a benchmark rate or start taxing these payments. HMRC has also failed to update their website, which has caused accountants to alert their clients of their changes, unaware that the website is wrong.  

Jack Semple, RHA director of policy, fears that many hauliers have been told there are “changes when there are none” and that a “more complicated system is being imposed, when that is not the case”.

HMRC blames lack of resources 

According to Kendrick, the RHA’s attempt to get HMRC to change their website has fallen on “deaf ears”. In response to the RHA, HMRC has blamed their lack of resources as the reason why it hasn’t updated its website.

The RHA’s attempts to get the Treasury to announce clarity on the issue have also been ignored.

“Some accountants don’t believe that we got that clearance,” Kendrick said, so the “RHA has to produce the evidence and then it all settles down.”

To eliminate the growing number of enquiries received, RHA has spent a lot of time talking to their members to assure them that the April changes does not affect lorry drivers’ expenses.

Semple said: “We have confirmation of that from HMRC, but HMRC inspectors have, in some cases, been imposing new demands on hauliers. And the website has been incorrect. It should have been put right immediately and we have made that point to HMRC.

“The overnight subsistence payment is a proper recognition of the realities of the road haulage industry – a sector that is vital to the UK economy – and HMRC should not be seeking to add to the burden of red tape in the way that it functions.”

About Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.


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29th Mar 2016 14:54

Lack of resources

Honestly, it's appalling that a Whitehall department trots this excuse out, and even more appalling that they are allowed to without challenge.

It really doesn't bode well for the future.

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31st Mar 2016 11:15

Too true!

SteLacca is clearly right, there was and is so much slack in the public sector that the government should be able to cut every department without limit and still expect them to do the same work as quickly as before the cuts.

Services shouldn't ever decline, even when there's only one trained tax inspector left.


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By Briar
01st Apr 2016 10:22

A new reason for appeal?

In future, e.g. late RTI's, can I too use the reason (excuse) of "lack of resources". Maybe "lack of resources" should be added to the content of "reasonable excuse". What's good for the goose should be good for the gander!

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