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Mileage Expenses – Examples of Fraud and Overestimation

My name is Alex Baker and during my time at Fleet Innovations I have come across some interesting and often astonishing stories of how business mileage has not only cost a company a lot of money but also cost some employees their jobs.  The short examples below are real examples with the names changed to protect the not so innocent.

Paul – The Phantom Journey Maker

Paul a divorced father of 4 was looking for a way to gain extra money without increasing his CSA payments to his ex-wife.  Paul worked from an from his home office in Bristol but had to occasionally commute to the office in Leeds,  a return journey of about 420 miles.  Paul soon realised that he could check his managers’ diary to see when he was not in the office and make a false claim for a return trip to Leeds on this specific day.  Pauls aim was to create one of these journeys at least once per week.

In over 5 years he never once was caught and at the end of his tenure with his employer had netted himself a “nice little holiday fund”

The cost of the fraud (based on 18 pence per mile)

  • Weekly the cost of this fraud was around £75 to the organisation
  • Monthly the cost of this fraud was around £300 to the organisation
  • Yearly the cost of this fraud was around £3600 to the organisation
  • In total Paul got away with around £18,000 during his 5 year tenure at the organisation

The Sting in the tail

The sting in the tail of this story if you employ someone like Paul it may cost you a lot more.  If HMRC investigate your expenses and discover this fraud they will be looking for the tax to be paid on this sum of money what’s more they may also request a fine to be paid.

That’s not the end of it however if they discover this kind of fraud they may want to look at your other drivers.

Paul alone could end up costing you more than £20,000 in unpaid tax and fines.  Now imagine the cost if you employ ten Pauls, worse still if you employ one hundred (£2million) or even a thousand (£20million)

Carl – The Over-estimator

Carl a sales manager for a small rental business lives in a village just off the A34 near Reading.  Now Carl like Paul is looking supplement his income and has discovered a nifty little way to do this using normal methods of mileage expenses.  Carl is required to fill in his monthly expenses in to an excel spread sheet and it is understood that occasional spot checks will be undertaken (an audit) to compare journeys to expenses claimed using Google maps

The Google maps tool is fantastic to print of directions between two points and also shows the distances that would need to be travelled.  The issue with Google is its lack of local knowledge.  Carl has found a way of exploiting this to his advantage.

Take the example below Carl always takes the direct back roads between his house and Reading (a regular journey) a journey of about 15 miles.  He has discovered however that google maps takes a less direct route that equates to 23 miles.  Now Carl has no issues submitting a claim for 23 miles when he knows full well only 15 miles have been driven as he knows this will pass any audit or spot checks.

Google Suggested Journey – 23 miles

Carl Actual Journey – 15 miles

The Cost

This gives Carl more than 50% extra in his mileage claim than required.  In total using this technique Carl believes he can rack up well over £2000 per year in extra mileage claims using his mileage rate of 45 pence per mile

Jill – 1 extra mile, no one will notice

Jill works for a rural NHS trust and in the daily process of completing her work she travels regular short journeys totalling about 6 or 7 trips a day.

Jill drives her own vehicle and is currently receiving a rather generous mileage rate of 69 pence per mile.  Jill has realised that adding a mile or two to each trip is perfectly feasible as there are so many alternative routes to each destination.  What’s more she only submits her mileage every two to three months so no one can possibly check up on her.  Can they?

The problem with this example is how quickly the numbers begin to scale into a very expensive problem, particularly when you consider that the trust employs nearly 1000 people claiming similar  mileage to Jill

The cost of the Over-estimation (based on 69 pence per mile)

  • Weekly the over estimation cost of Jill was around £24 to the organisation
  • Monthly the over estimation cost of Jill was around £96 to the organisation
  • Yearly the over estimation cost of Jill was around £1152 to the organisation
  • Yearly the overestimation of 1000 drivers will cost the organisation £1,152,000

So you can see that just 1 mile over estimation per journey can soon add up to well over £1milion

Some other quick examples I have come across

 

The company car driver whose vehicle was returned to the leasing company after 3 years with 32,000 miles less on the clock than he had claimed in mileage expenses.  The customer worked out he had claimed more than £6000 extra in tax free mileage. A full disciplinary was pursued

Another company car driver claimed to have driven 62500 business miles in 1 year.  Now this is high but still possible.  The trouble here is the driver was employed 9-5  Monday to Friday and only ever worked in London where the average speed is between 12 and 30 MPH.  Meaning this driver would have to be driving between 8 and 21 hours every working day.  The nature of his job ensured this was not possible.  A full disciplinary was pursued

What can we do to help?

At Fleet Innovations we offer an innovative solution that eliminates the overestimation and fraud in the examples above.  PEAK Mileage Capture uses a unique patent pending GPS Dongle.  The GPS dongle is placed in the USB port of cigarette lighter of a vehicle and tracks each journey.

When a claim is due you simply upload the data to our portal and complete your claim in around 5 minutes.  Any personal journeys can be hidden from view so avoiding any big brother issues.

Our aim is to offer simple, quick and accurate mileage claims that are fair and equitable for all parties.

If you would like to find out more email us at info@fleetinnovations.com or visit www.peakmiles.com

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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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