All - Company charging fuel on real world MPG

Honest John Back Room » Legal matters
What is life like with your car? Let us know and win £500 in John Lewis vouchers | No thanks
View Threaded
Mon 28 Dec 2015 09:55
All - Company charging fuel on real world MPG - Chr15 M

Hi all, while most companies were enjoying christmas eve parties, at our our company our company car drivers were sent an email to say that after a recent HMRC audit they adivsed the company bosses that they should work out company car drivers private fuel by actual real world MPG figures not the manufactures book MPG figure.

We all have our fuel paid for and complete a business and private fuel record each month. We are then charged for private fuel based on the MPG figure of the car.

My question is, are the HMRC actually advising this? or is it the company trying to cash in on the recent fuel scandel? and if this is actually a fair way of working out the cost of private fuel? Some company car drivers work in london whilst others drive motorways. Shoudl they be penailised on the areas they have been assigned. Also they would have chosen there vehicle based on the manufactures book MPG figures. Doenst seem legal to me?

Thanks for any responses

Reply | Report as offensive | Link
Mon 28 Dec 2015 11:52
All - Company charging fuel on real world MPG - RT

If we assume that real world mpg is worse than EU standard figure, and that you reimburse the company for private miles - it means that up to now you've been underpaying - which is a taxable benefit-in-kind which is probably why HMRC have highlighted it.

Your only penalty is the future loss of a tax-free perk - and it's difficult to argue against that.

Reply | Report as offensive | Link
Mon 28 Dec 2015 12:54
All - Company charging fuel on real world MPG - Palcouk

And whose "Real World Figures" are they refering to? HMRC is not going to give any specific RWF link

Reply | Report as offensive | Link
Mon 28 Dec 2015 13:24
All - Company charging fuel on real world MPG - RT

And whose "Real World Figures" are they refering to? HMRC is not going to give any specific RWF link

Since the company is paying for all fuel, it can work out the overall consumption for each vehicle - not difficult and done routinely to ensure that such drivers aren't filling up all their mates' cars as that would show as very high apparent consumption.

Reply | Report as offensive | Link
Mon 28 Dec 2015 16:47
All - Company charging fuel on real world MPG - skidpan

Where I woyrk since company credit cards were taken off car users about 6 years ago fuel expenses have been claimed back based on either the official combined mpg or if the user can prove that the car does less mpg its based on that figure. All car users simply keep a spreadsheet which calculated the exact mpg they are getting and they keep a note of business miles. Divide business miles by mpg and that is their claim for the month.

Works well and users happy that they are being reimbursed for the fuel used for business. Presumably HMRC is happy as well, never heard of any issues.

Reply | Report as offensive | Link
Mon 28 Dec 2015 17:10
All - Company charging fuel on real world MPG - Bromptonaut

The underlying question from the OP is to ask whether his employer is lying about an HMRC audit. To which the answer surely is to ask for sight of the document. Not in a challenging way but perhaps by asking for some employee input into how the reccomendation is implemented.

HMRC have, for some considerable time, been bearing down on over generous interpretations such as that mentioned and had a working party looking at them. One exanple was 'market value' of bicycles leased under the Cycle to Work salary sacrifice scheme. Employers were treating this as a nominal sum. After 2009 HMRC imposed a valuation table based on percentages of original purchase price. Much less generous in years 1-3 but valuation fell to zero in years 4 or 5. Fine so long as you held onto the bike rather than trying for a new one every year!!

Reply | Report as offensive | Link
Mon 28 Dec 2015 18:58
All - Company charging fuel on real world MPG - Engineer Andy

I personally wouldn't put it past firms to lie about such things - one of my former employers used out-of-date AA per mile costs and car engine size bands to justify their really stingy mileage rates and bands (we got 35p/mile up to 4000 miles then 25p thereafter, rather than [as almost all other firms did for people using their own car] 45p/mile up to 10k miles and 25p/mile thereafter). That reduced bands (no engine size any more) was supposed to encourage people to buy more fuel efficient cars - all my old firm did was encourage staff to leave (they were terrible at most other things - lesson learned) by their stingyness and lies (I even showed them the latest AA rates and they still refused to budge).

Saying that, HMRC and the Tresury need little excuse to 'clamp down' on so-called in-work perks as they do with trying to tax everything we do and make working life so complex from a financial pov.

Whatever happened to common sense?

Reply | Report as offensive | Link
Mon 28 Dec 2015 19:13
All - Company charging fuel on real world MPG - RT

HMRC rates are set as maximums, not standards, and AA rates are such that many companies find it cheaper to provide cars, ie pay the actual costs, than pay the AA rates.

Mileage rates are a matter of negotiation, just like wage/salary rates.

It seems common sense to me that benefits of employment are taxed, whether it's money or benefit in kind.

Reply | Report as offensive | Link
Mon 28 Dec 2015 23:46
All - Company charging fuel on real world MPG - Engineer Andy

My point was that my former firm was using out-of-date figures which actually were loss-making for people with average-sized cars like mine, thus peed them off (amongst other things) that they felt the need to resign during the height of the recession. I certainly didn't benefit financially from the 'arrangement', which amazingly was never mentioned at interviews. I have no problem in paying fair taxes for perks (which are effectively extra pay), but NOT getting (as a minimum) what it costs me the full cost of providing my own car for company use.

Similarly, taxes should be levied in a fair way, sometimes I agree that they should be used to encourage (for example) use of more environmentally friendly forms of travel (as long as the alternative is viable), but never to price people out of jobs because they cannot run a car or other vehicle for company purposes at a loss or spend copious amounts of time determining the exact amount to be taxed upon. Such things should be simple so everyone understands them and is fair to all as far as possible.

Reply | Report as offensive | Link