Keep mileage claims under control

Making sure employees’ mileage claims are accurate can keep employers’ fuel costs under control, says Nic Paton

If you read nothing else, read this…

  • Mileage capture schemes can reduce fraudulent claims and help with HM Revenue and Customs compliance.
  • Recognise that not all mistakes will be down to fraud.
  • Employers should spend time communicating to staff why they are doing it, let them see the benefits and give them time to get used to it.
  • Decide how to deal with errors or fraudulent claims, perhaps taking a tougher approach as time goes on.

Fraudulent mileage claims are often seen by staff as a victimless crime. If their journey has involved leaving home earlier or later than usual, or working longer hours, adding a few extra miles is often regarded as little more than well-deserved payback and seen as unlikely ever to be questioned. According to research published by expense management firm Global Expenses last December, business mileage is the most likely expense claim to be exaggerated, with 60% of claims cheats admitting to doing so.

But with the recession forcing employers to watch every penny, more organisations are turning to mileage capture schemes to control, check and verify mileage claims. As well as clamping down on fraudulent claims, such schemes can also help to keep HM Revenue and Customs (HMRC) happy, says Paul Jackson, managing director of mileage capture company The Miles Consultancy.

HM Revenue and Customs compliance issues

“It is about streamlining processes so employers are only paying for the mileage they ought to be paying for,” he says. “Then there is the motivation of ensuring they are meeting HMRC’s compliance issues, which have been getting much stricter of late. There can also be an agenda around corporate manslaughter issues and being able to show there are no legal or medical reasons why drivers cannot drive.”

The firm’s Mileage:Manager system enables mileage claims to be submitted online from any location at any time and can be integrated into employers’ expense and payroll systems. It can operate as a standalone tool or as part of a wider vehicle management system. Lloyds TSB Autolease’s Mileage Logger tool operates in a similar way.

Mileage capture tool cuts fuel spend

Gatwick-based construction firm Rydon has used a mileage capture tool from since November last year for its 250 company car drivers. Since then, it has seen its fuel spend drop by 18%, says fleet manager Simon Watts.

“We were having issues with HMRC wanting more decent mileage recording,” he says. “Some of our drivers were a bit lazy about it and not putting in their paper returns when they should have been or on a regular enough basis. Sometimes we would get six months’ worth in one go.”

But employers that are thinking of introducing a mileage capture scheme must be careful about how they go about it. What they do not want is to end up with an industrial relations crisis with employees thinking they are being accused of stealing, even indirectly, says Jackson.

Promote system’s advantages to staff

Employers will also need to promote the system’s advantages, such as the fact they can offer greater consistency in what drivers receive and how quickly claims are processed. “Employers have to be very careful when they call someone in and have a conversation [about mileage],” says Jackson. “Sometimes it can be there was a problem with the car, a motorway was closed and they had to go another route, or simply they have a particular, longer route that works for them.

“For example, if [an employee] goes from Glasgow to London and changes lanes frequently, they will log seven miles more than someone who sits in the same lane. So employers need to work out their approach.”

At Rydon, Watts says it was a question of carefully communicating the change, having a timeframe for it to be bedded down, and initially taking a softly, softly approach.

“We ran some workshops, inviting people to come along and have a look at it and have it all explained,” he says. “We always knew the majority of staff were being honest with us,” he explains.

System teething troubles resolved

But the firm did experience some teething troubles, with some employees not fully understanding the system or still failing to get returns in on time. Most of these issues have now been resolved.

If budgets are tight and employers cannot afford to buy in expertise, simply showing they are taking an interest in mileage claims – which so often get rubber-stamped by line managers with better things to do – will often have the effect of reducing the size of employees’ mileage claims.

“We look at perhaps two people a month,” says Watts. “We have a close look at them and a little chat if something is really wrong, and let the jungle drums do the rest of it.”