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564 – Business mileage fraud

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9 March 2011

 

IF you are still fuming inwardly at the level of bank bonuses – the nationalised ones supported by us, the tax payer, glad-handing themselves £28m in bonuses – then consider this.

Not only is your money supporting bankers’ bonuses, it’s also supporting a fraudulently enhanced lifestyle for some public sector workers in councils or government.

And before you think I’m just unnecessarily bashing another easy target, have a look at this astonishing statistic: 40% of all public sector workers checked by business mileage audit firm TMC submit fraudulent mileage claims – and remember, many of these are on much higher AMAP rates than the 40p per mile small businesses claim legitimately for business mileage. It’s a scandal.

“We have 100 clients and of the employees in those 100 organisations, 25% on average submit false mileage claims,” Paul Jackson, boss of TMC, told me yesterday (pictured above). “But,” and this is the bit when I nearly fell off my chair, “when it comes to councils or government that rises to 40%.”

“What!” I exclaimed.

“Well, if you think about it, an extra 10 miles a day claimed means your gas bill is paid for the month doesn’t it?” Paul responded very calmly.

It was an astonishing revelation to me – such casual thieving. By employees paid for by us through our council tax and personal and corporation taxes. If the Chancellor wants to plug more of the gaping national debt, then a look at the public sector wouldn’t go amiss by the sounds of it.

I was talking to Paul about HMRC investigations into false mileage claims, an area in which HMRC is taking a greater and greater interest, partly because it’s so easy to prove that claims are false (see our news story HMRC starts scrutinising mileage claims).

Paul’s company, TMC, is a small business that provides online automated systems that enable company car and drivers of private cars used on business to accurately record business and private mileage.

“It’s not difficult, is it?” says Paul. “You can use the AA Routefinder or Google maps and work out the route for yourself and quickly see what is being claimed for correctly – and the cases where it’s been exaggerated.”

Paul says the usual HMRC investigation lasts about eight to 12 months and involves a random sample of staff whose mileage claims are investigated. From the number of false claims HMRC extrapolates the data across all the company car drivers in the company and arrives at a figure which it then back dates to collect the tax, while not forgetting the NI either.

While Paul says action is currently confined to larger corporates, it would be wise for SMEs to start making sure they have systems in place to support mileage claims. Because before long, there’s little doubt HMRC will be turning its attention to smaller businesses.

And the Revenue – the government – needs money fast to help support the national debt.

The message is clear. Get systems and paperwork in order. Or be at risk of an investigation.

Editor’s Blog in conversation with TMC’s Paul Jackson

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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