Business motorists short changed by the Treasury

Many business motorists are being short changed because of the dogmatic approach to travel-related mileage payments by the Treasury and the taxman.

That’s the view of a management consultancy firm which has researched motoring costs for the RAC.

According to Emmerson Hill Associates, both the Treasury and HMRC assume that people paid more than their notional figure of 40p per mile make a profit out of running their cars for business, and are therefore liable for tax on it.

But the system does not appear to recognise that drivers may suffer a loss due to the rapid escalation in fuel prices.

A spokesman for the consultants claims that the unwillingness of HMRC to index-link official mileage rates, coupled with the dogmatic belief that employees make a profit out of running their cars, is causing considerable discontent among employees. Many are now refusing to use their own cars on their employers’ business because they are out of pocket.

The spokesman goes on to say that company car drivers are also badly hit as HMRC also set out so-called advisory fuel rates for company car users, which are supposed to be reviewed when fuel prices increase by a margin of more than five per cent.

But HMRC hasn’t been exactly quick off the mark to adjust these and are miles behind the curve in their reaction time, added the spokesman.