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Business Mileage Recording & HMRC Compliance




According to the Association of Accounting Technicians (AAT) this is one of the most difficult problems that exists in relation to business mileage expenses and one where often records are poor.

So, how can we satisfy HMRC that adequate expense claims and/or business mileage logs are being kept?

HMRC guidance says that you need to keep a log showing:

  • Dates
  • Trip made
  • Business mileage

This sounds straight forward, but in practice HMRC Inspectors require sufficient detail on the logs for them to be able to independently review the trip details and compare the mileage claimed to their system.  This will need accuracy of locations in the ‘trip made’ details as HMRC normally allow a 10% tolerance.

HMRC says:

What records do I need to keep

You will need to keep records of your work journeys (date, mileage and details of journey). This is because your employer will need to know the mileage in order to make any expenses payments to you. You will need them to substantiate your right to any Mileage Allowance Relief, whether or not you do this via a tax return”

Based on the above you will need to record:

  • Date
  • From(Full address / Post Code)
  • To(Full address / Post Code)
  • Mileage(Accurate to nearest mile)
  • Reason(Detail to show it is a business trip)

In addition the claim will need to identify the vehicle, type, fuel, cc etc. to tie in with amount claimed.
tax man

Implementing a robust and accurate system still seems to create a lot of problems for employers and getting this wrong can prove very expensive when an HMRC officer carries out an employer compliance review. Reimbursing ANY business mileage expenses in excess of the cost incurred may result in an Income Tax and a Class 1 NIC’s liability.

Of even more concern is if an employer reimburses the cost of non-business or private mileage in a company car which could result in expensive company car fuel benefits being imposed by HMRC. Then there is the interest and penalties that could be added to the bill.

HMRC will look to establish that the claims made do no more than reimburse the cost incurred for genuine business travel.

It is vital that the records are accurate and complete and that it is easy for drivers to complete them.  Keeping it easy and fair is important because employees are prone to exaggerate mileage claims if they think that the rate of reimbursement is too low. Another common problem are employees who claim to do little or no private mileage when it comes to reimbursing the employer. Sometimes monthly claims show little (10 or 100 miles) or no mileage and an employer cannot let that go.

Expenses have become even more of a hot topic over the last few years, partly because of the scandal of some of the claims of our MP’s. But let us not forget that HMRC employer compliance officers always have and probably always will see this issue as a high risk one with scope for recovering sometimes substantial settlements, especially when company cars are involved and fuel scale charges may be imposed. The rules are strict and often difficult to understand for employees and so it is vital to keep on top of this.

One option is the use of innovative GPS technology, which aids the maintenance of accurate records in a fraction of the time taken to complete ‘traditional’ paper based or online records.  Also, the driver is in control of the data and so ‘Big Brother’ issues associated with off the shelf telematics solutions is also managed.  The driver simply hides the detail associated with the private trips but still retains a full audit trail of the business trips to support their claim (see below).  Finally the system holds details of the trip reason and ‘friendly’ names etc. making it easier and easier to use.

Soon your business mileage recording could look like this

 journey snippet

For more information please contact:


  0845 600 6880

or visit our web site: www.peakmiles.com

peak 5 step

Simple, Quick and Accurate Mileage Capture. PEAK Mileage, Capture® uses GPS technology to accurately track your business, journeys. Your business mileage trips will include any detours and shortcuts and ensure total fairness when making a claim.



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About the Author

Alex Baker
"The reasonable man adapts himself to the conditions that surround him... The unreasonable man adapts surrounding conditions to himself... All progress depends on the unreasonable man."

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