24 October 2019
I recently had a call with the new FD of a motor client, discussing his obligations under the Senior Accounting Officer (SAO) regime, and I joked with him that regular readers of these blogs may get fed up with me banging on about fuel, but I’m not going to stop until it’s taken more seriously!
HMRC continue to focus on the motor sector with PAYE inspections, where time and again we see this issue come up. Clients, perhaps rightly, believe they are not actually providing staff with private fuel, but they can’t prove it adequately and are suddenly looking at six figure tax settlements.
Fuel benefit for company car drivers is unusual in that it is an “all or nothing” situation; if you cannot prove that employees in company cars have not had a single drop of fuel available for private use then HMRC will apply the benefit in kind across the board.
Do you have fuel cards in use within your business? Do employees use their company cars for demonstrations? If you answered yes to both of these questions then you need to be absolutely certain that you have robust systems in place to track how fuel is used, and to be able to demonstrate that recharges are in place where appropriate.
Even without demonstrations, as soon as HMRC see that fuel cards are in use within a business they will drill down on this and want to see evidence of their usage.
I mentioned in a previous blog with a similar theme that the best steps you can take right now are:
- Carry out a full health check of your PAYE compliance. Are your policies up to date and accurate? Is your monitoring of expenses sufficient? Do you have any areas of risk and can these be mitigated against? Do the procedures followed by your employees actually reflect what is recorded on paper?
- Consider the cost implications of an HMRC enquiry, and review your fee protection insurance position; are you covered against the accountancy costs of handling an inspection?
Fuel is without doubt the biggest risk area in the motor sector, but it isn’t the only one, and the cost of dealing with a full scale HMRC inspection can be significant. Now is the time to get ahead of things.
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