Mileage capture can cuts costs and reduce carbon footprint
The accurate recording of business mileage is essential for companies that want to keep their mileage expenses in check and help reduce their carbon footprint through eradicating unnecessary mileages.
But there are also good regulatory requirements for keeping accurate mileage records, too, following reports that HM Revenue and Customs are taking a tougher stance with firms that have not been scrupulous in their business mileage capture.
Last year, HMRC announced it would investigate the records of 60,000 small and medium sized businesses by 2015, in what are officially known as Business Record Checks (BRCs). Accurate mileage capture can actually lead to a physical reduction in business mileage, with some experts predicting a reduction as high as 25%. And business mileage capture, especially online, can be a time and administration saving for drivers, as well as for the company.
At the same time, mileage capture can also help support CO2 reporting and carbon reduction targets by providing an accurate measurement of how far company drivers are actually driving.
As well as ensuring the company remains compliant with HMRC regulations, accurate mileage capture also allows accurate mileage expenses to be reimbursed. And it also allows company managers to assess the risks associated with high mileage drivers, as well as flagging up vehicle servicing in advance.
At CLM, through a password-protected and secure business mileage capture system, drivers are required to enter their mileages at the start and the end of the period, typically monthly. Where required, they are also asked to provide the split between business and private mileage.
The mileage entry is then hyperlinked to the drivers’ manager for authorisation and automatic input into the company’s payroll department. The process is not only accurate and secure, it also meets HMRC requirements.
The onus is on drivers to accurately complete their mileage records, on time and to accurately. Those drivers that do not enter their mileages are automatically locked out of the system if they are more than 14 days late with their submission.
At this point, the system assumes all the mileage travelled is private and not eligible for reimbursement. The onus then falls on the driver to contact his or her line manager and explain why they haven’t submitted their mileage claims on time and to try and re-negotiate their mileage reimbursement.
If drivers fail to update their details, they will be unsuccessful in their mileage expenses claim, and can be flagged up in an exception report to the key stakeholders for further action to be taken.
The system can be adapted to take mileages from both bunkered fuel and that bought from the forecourt, through corporate credit cards and fuel cards.
It is also perfect in creating a clear and transparent audit trail for HMRC inspectors to follow in the event of a tax inspection and business mileage inspection, to ensure that companies do not find themselves on their end of a six figure fine.
Essentials of mileage management
Any mileage capture system should have several core attributes in order to achieve maximum results:
- It should reduce administration for both the company and the driver.
- It should be flexible enough to cover all types of fuel payment methods and reimbursement rates.
- It should provide analysis information that can be used by managers to help reduce wasted journeys.
- It should report on all types of vehicle including relief cars, pool cars, private cars etc.
- It should be able to satisfy HMRC reporting needs and assist with corporate governance issues.
- It should stop creative or fraudulent expense claims.
If you would like any further details on mileage capture and why it’s important for your business, then please get in touch.