I like many people had hoped that our taxation system would be made simpler but no it seems like one more administrative burden after another. An example for you with something as seemingly innocuous as a change in the Advisory Fuel Rates. These are rates published by HMRC for use by employers who either reimburse the cost of business fuel to their company car drivers or where both business and private fuel is initially paid for by the employer, usually when a fuel card is used, the employee to avoid a company car fuel scale charge reimburses their employer the cost of private fuel.

The latter option is always the most dangerous because any amount of private fuel not reimbursed leads to a fuel scale charge, which is a hefty benefit in kind that HMRC will pursue the EMPLOYER for, together with Class 1A NIC – imagine that cost if you’ve been getting it wrong for a few years!

So most employers pay AFR’s which used to be reasonably straightforward before we had the massive increases in the cost of petrol and diesel. Now employers face the constant “discussions” with their employees over what rate they should receive, as prices fluctuate. HMRC like the teflon kid (non stick if you’re feeling a bit slow this morning) simply point to the fact that they are only “Advisory” rates and that employers can pay higher rates if they can prove that they are justified – more admin v disgruntled employees

So what has now happened – well previously HMRC would give a month’s notice of a change in the rates, so allowing employers sufficient time to change their systems. Not now this one month’s grace has been removed and if you didn’t pick it up the new rates were announced on Friday, so for most employers that would have actually meant this morning, 30 November with the rate change from 1 December ie tomorrow – madness!

It’s like a game where the rules keep changing and if you get it wrong there’s penalties etc accumulating.

If the rates go up and you don’t spot the changes then you may be paying less than you can – I’m sure those employees will be telling you and you will need to make (if you want) a correction – more admin! but the contra side of this is that if employees have to reimburse you then you will have problems because they won’t be reimbursing enough and oh what joy from HMRC – private fuel scale charge

What happens if you only pay business mileage and the rates go down and you don’t spot them – feel the pain

This is just another trap that unsuspecting employers can and will fall into and wait for your next employer compliance review, tax investigation – this employment tax expert bets that this is an area where there will be a heightened level of interest – so be warned!