Does it matter if my van is used privately? Part 2
by Fiona Taylor
The vast majority of commercial vehicles in businesses in the UK do not pay the benefit charge, and therefore do not allow significant private usuage of their company vehicles. Business owners must keep mileage records for their commercial vehicles to ensure that their vehicles are not being used for private purposes.
The burden of proof of compliance rests solely with the business that owns the vehicle, and not with HM Revenue & Customs (HMRC). So, as a buiness owner, it is your job to prove the that vehicle hasn’t been used, it is not up to HMRC to prove that it has been used.
The full HMRC rules can be found on their webpage, or see some details on our first blog post Does it matter if my van is used privately – part 1.
Satmo offer a solution to this, the Webtrack system will do more than just show you where your vehicles are, it also contains all of the information that you need to ensure that you are tax compliant when HMRC come to check.
For each trip the system will record the following information against each vehicle:
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Start and end date and time of the journey
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Start and end location of each journey
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Mileage
If you update the system with your customers addresses you will also have information about the job that you were doing. Thereby confirming that it was business travel and not private mileage.
You may be charged a penalty if you carelessly or deliberately give inaccurate information in your tax return that results in you not paying enough tax.
To work out what you owe you can use a P11D Working Sheet 3 and can report the benefit on a P11D.
If HMRC determine that you are not compliant with their guidelines then they will calculate a penalty payment. Non compliance means that they believe that there has been a private benefit of the use of the vehicle but not reported to HMRC, or that there are no records to support the fact that the vehicle has only been used for business mileage. This can end up being a very costly situation as HMRC can backdate the penalty to cover a 6 year period, and then apply one of the following penalty charges;
- 30% of the full penalty amount for careless inaccuracies
- 70% of the full penalty for deliberate inaccuracies
- 100% of the penalty for deliberate and concealed inaccuracies
These penalty payments will be divided into 2 parts – a penalty for the employer who will need to pay back the incorrect P11D amount, plus the underpaid nation insurance contributions, plus a fine. The employee will have a penalty that is the tax based on the underpaid benefit.
Your payroll advisor or accountant ahould be able to help you with the necessary calculations and reporting.
Catch part 3 in our series of blogs later this week to see how Satmo can help with the necessary reporting needed to stay on the right side of the HMRC rules.