HMRC's overnight allowance concessions a welcome move, says Menzies
Accountancy firm Menzies has said hauliers will welcome the ground that HMRC has given over the process around overnight allowances.
“The commercial fleet industry will be very pleased with the concessions negotiated by the RHA. These will make it far easier for both drivers and fleet operators to manage the new tax regime relating to overnight allowances,” said Andrew Brookes, head of employer solutions at accountancy firm.
Brookes said fleet operators had been concerned about the increased administration ever since the abolition of dispensations in April 2016.
From that date, a bespoke agreement has been required if hauliers or logistics companies wanted to reimburse more than the standard amounts, or wished to adopt the industry rates negotiated by the RHA.
“Without this, such payments are taxable,” said Brookes. “HMRC has been concerned that some companies might have been abusing the system in order to provide tax-free payments when they are not due and are understandably keen to ensure that this is stamped out.
“Consequently, they were seeking to impose onerous procedures on firms to prevent abuse.”
Brookes said that according to the RHA, as a result of the concessions agreed, drivers will no longer be required to provide receipts equating to exactly the right amount to cover their overnight allowances.
“While evidence must be obtained by the driver, they will only need to provide this to their employer if asked to do so. They will be allowed to supply receipts in a digital format – for example, a photo taken on a smartphone – which will make things much easier for drivers and eliminate unnecessary bureaucracy for managers,” he said.
“We would recommend drivers are instructed to take a photo of a receipt rather than simply the food they have bought to avoid the risk of an HMRC officer saying there is no evidence to show that the meal was purchased by the driver and therefore the exemption does not apply,” he added.
Brookes said that from haulage firms’ perspective, they will simply need an acceptable system of random review in place and then a record of the expenses paid, rather than retaining receipts for every single claim.
“While the concessions will be welcomed, it is important to note that haulage firms will still need to apply to HMRC for the right to use the bespoke rates, but we understand a simplified application process has been agreed by the RHA,” he said.
Brookes added that at time of writing, Menzies was still waiting for HMRC to publish their revised guidance to reflect these changes.