BUSINESS MILEAGE ISSUES AND THE TAX MAN - Help!

HONEYMONSTER

HI

My brother has just lost his job and they have with-held his final wages on the grounds that they are reclaiming all the monies charged to a fuel card and we are somewhat stunned by this and need guidance as we can't get through to the inland revenue to clarify the situation.

Basically he holds a full driving licence but does not have his own car and over the years his employers started to ask him to do collections and deliverys for them using the MD's personal car. Indeed over the years this built up to be a few hundred miles of travel per week. However he has never claimed any expenses for this for two reasons. Firstly we understood that he could claim 40p per mile for the first 10,000 then 25p per mile thereafter, this being for the cost of the petrol and the wear and tear to the car. However they issued him with a fuel card so he didn't have to pay for the fuel and as it is not his car, he could not claim wear and tear on it. Therefore he understood, although no-one discussed this with him, that as it was his MD's personal car, the MD would have to claim this mileage allowance, by offsetting the fuel card charges against this 40p per mile allowance. My brother has never claimed any allowance over the 18 months in question nor has he been asked for any mileage details.


Obviously he may have gone out in the car on business, filled up the tank using the fuel card and then returned the car to the MD with a full tank, which my brother did not get the benefit of.

The company have witheld his final pay as they say that (a) they are reclaiming all of the fuel card expenses during the last 18 months and (b) on occasion the MD put repair bills through the books for his car and whilst it is true to say that my brother was the one that took the car to the garage on his instructions, they are now reclaiming these garage bills from him also. Please understand that these repair bills are for MOTs and general wear and tear stuff,not as a result of any accident or misuse by my brother, which they aren't even alleging. He intends to take this to a tribunal for unlawfully witholding wages but I would just like to know that I am right in my thinking of the tax position for the MD's car as they have said he has been evading tax?

In my mind, he doesn't own the car so why should he pay the repair bill and he has had no personal benefit of the use of the car so how can they hold him responsible for the fuel?

However the MD does have a company van, which he was using at the time he got my brother to do errands in his car, so where would he stand as he had a company van and fuel card and then his personal car and fuel card for that too?

Any help would be much appreciated.

TM1976

Firstly this deduction is illegal under ERA 1996 : http://www.opsi.gov.uk/acts/acts1996/ukpga_19960018_en_3#pt2-pb1

If it's the MD's personal car he (the MD not your brother) either needs to reimburse the employer for the fuel and the repair bills or pay tax on these amounts. If he repays the amount he can however persue the employer for reimbusement based on AMAP mileage rates and your brother's mileage.

If it is the MD's car your brother should not be taxed on this, the only concern is if he could be considered as being provided with a company car through the MD - if this is the case the treatment still isn't correct. Did your brother return the car to the MD at the end of each day or did he take it home with him?

BoGoF

If anybody will be in any bother with the taxman it will be the employer not your brother. I don't see any tax implications for your brother unless he gained some sort of private use of the car.

Same applies to the company van unless there is private use (other than insignificant amounts) then there is no tax use.

Either way it is illegal to withold any wages.

John_Pierpoint

However your brother's employer should have asked your brother to put in a log sheet of his use of the car when on business. Presumably the accounts department has got round to assuming that all that mileage was private mileage on the part of the MD.
So there are unhappy bunnies at the top of the company.
He did not by any chance keep a diary or other record of these business trips did he?

[This rather smells of the attempts by filling stations to charge the guy on the tills for the drive off's - the ones that don't pay]