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Finance

HMRC AUDIT BRINGS THE IMPORTANCE OF EFFICIENT FLEET MANAGEMENT TO LIGHT

HMRC AUDIT BRINGS THE IMPORTANCE OF EFFICIENT FLEET MANAGEMENT TO LIGHT

The wide variety of business continuity checks that a HMRC audit covers has helped highlight the importance of utilising digital tools, such as vehicle tracking, in order to properly validate that the right fleet management procedures have been followed.

Recently, the government has increased the budget for tax inspection with the aim of reducing evasion and serious fraud by £900 million. This means that the chance of being inspected by the HMRC has considerably increased, making it more important than ever to ensure there is an accurate record of expenses.

Talking business…proof that the concept works

Illustrating this is the case study of the Staffordshire-based ArB (Tree Care Specialists) which provides services such as tree surgery as well as selling firewood and Christmas trees to both domestic and commercial businesses.

Given the inherent importance to the business that lies in being able to reach customers and suppliers on time, the firm’s managing director, Anthony Bethell, was keen to identify a digital solution that allowed for the tracking and recording of real-time fleet data. Once this was decided on and implemented, the benefits as far as the day-to-day go were quickly felt.

However, this year, ArB was subject to a routine HMRC audit of their business – a stressful, time-consuming and worrying activity for any business. Despite this, the earlier strategic choice made by the firm’s managing director to incorporate RAM vehicle tracking devices was to play a pivotal role in the audit’s successful outcome.

Accelerating accuracy…

HMRC asked ArB to account for their vehicle usage and where they were kept. HMRC in particular was interested in how Anthony’s vehicle was being used for private usage and whether records kept were accurate.

Anthony’s own company car was fitted with a RAM Tracking device and as such, Anthony was confidently able to give HMRC a thorough history of all usage of his vehicle on the spot. Every time Anthony used his vehicle he could activate it with either a business or a personal fob. Using this system, Anthony was able to record the type of usage. This not only helped with accuracy but it saved countless hours working this out manually – all of which can be ploughed back into the business to make it more viable and successful.

Commenting on this, Anthony said:

“If this essential tool had not been installed, it would have left me reliant on the entire team keeping manual logs of when my vehicles had been used for private mileage. Without these automated processes it may have resulted in the business being penalised to the tune of thousands of pounds!”

However, the need to use such tools for reasons over and above the possibility of a tax inspection are evident, as Anthony explains:

“Seeing business accountability as a long-term requirement, rather than a quick fix, is vital to the long-term success of any enterprise. Although this requires initial time and investment, the benefits a tracking system provide on a day-to-day basis not only ensure a vehicle fleet is operated legally but also help guarantee that there is an increase in one of the most important attribute where running any business is concerned – time.”

Squaring off the hole

Of course, vehicle tracking is just one aspect of the wider gambit of running a successful and efficient business – and undergoing a tax audit should this be necessary of course! Accurate bookkeeping, as well as pro-active, internal drives to look closely at efforts in this area are essential too as these stand business owners in good stead for any external checks that take place. This advice should, of course, already be a core focus where submitting annual tax information is concerned but the potential to reduce the stress and worry connected with a HMRC inspection does, of course, help motivate business owners staying up to date and addressing any contingencies early on.

Global Banking & Finance Review

 

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