The commercial fleet industry will welcome the Overnight Allowance concessions negotiated by the Road Haulage Association (RHA), says accountancy firm Menzies LLP.
RHA members had complained that newly-imposed rules were confusing, unfair and were costing them money.
The most contentious issue was an insistence from the tax officials that drivers must produce receipts to cover the exact cost of the overnight allowance they are paid to cover subsistence when they are sleeping in their cabs on long haul trips.
HMRC has now issued new guidance which means drivers won’t have to produce receipts totalling the exact amount payable under the overnight allowance and that other means of recording expenses, such as digital photographs on a smartphone will be acceptable to the tax authorities.
Andrew Brookes, head of employer solutions at Menzies LLP, said: “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.
“Fleet operators have 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 want to adopt the industry rates negotiated by the RHA. Without this, such payments are taxable.
"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.”
Under the concessiosn 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 also be allowed to supply receipts in a digital format, such as a photo taken on a smartphone.
Brookes added: "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.”
"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.”
“At the time of writing, we are still waiting for HMRC to publish their revised guidance to reflect these changes, but have no doubt that the industry will appreciate the efforts of the RHA.”
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