In the UK, business mileage is one of the most commonly claimed- for expenses.

As a business owner, avoiding penalties for business mileage is paramount. When you own a business that involves any sort of driving, whether it’s a delivery company or a taxi company, you will need to keep track of your employees’ mileage for tax purposes. This isn’t always easy.

Often employees don’t correctly estimate how much fuel they’ve used during working hours and this can leave you with some problems when it comes to complying with the HMRC. Also, as fuel prices fluctuate so often, it can be increasingly difficult to make exact calculations.

Penalties for Business Mileage

If you don’t accurately provide the HMRC with your business’s mileage numbers, then you can face some fairly large penalties. These penalties are usually in the form of a fine. These fines can be up to £6,000 for one year, on just one of your drivers, and these fines can be enforced for the previous six years.

Ultimately, not providing accurate information to the HMRC can cause financial problems for your company. It’s easier than most companies realise to face penalties for business mileage. Not keeping track of your expenses properly, losing petrol receipts and drivers over or under- estimating their mileage can all lead to penalties for your business.

How to Avoid Penalties for Business Mileage

There are a couple of things that you can do to ensure that you avoid penalties for business mileage. Firstly, you can ensure that you keep good records of your company’s mileage in terms of fuel expenses. This is often easier said than done. Many companies use a pay and reclaim system, where their employees need to keep all of their receipts, but this presents problems for businesses.

Arguably, one of the best ways a business can effectively and efficiently keep records, track their business mileage, and comply completely with the HMRC is to use fuels cards, like those available from AllStar Fuel Cards or KeyFuels.

When you use a fuel card, you don’t have to keep paperwork for fuel expenses, meaning your employees no longer need to keep receipts from fuel stations. This means less administration for your business and less stress for both you and your employees.

A fuel card provider will provide your business with an itemised VAT invoice, which complies with the HMRC. You don’t have to keep receipts or any other paperwork for fuel, or track your employee’s transactions manually. This invoice will provide you with a full report on where the fuel was purchased, what type of fuel was purchased, how much was purchased and how much that fuel cost. This saves you and your employees a great deal of time and effort. You can use this time to focus on other, more important areas of your business.

Overall, a fuel card can assure that your business avoids penalties for business mileage, and make it easier to claim VAT back.