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Mileage expenses: HMRC appeal

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HMRC is proceeding with an appeal against the decision of the First-Tier Tribunal in Total People Ltd v Revenue and Customs Comrs TC 661.

As Tax Journal reported on 20 September 2010, the company provided the services of apprentices and trainees to employers, and supervised their training. 

It paid advisers a mileage allowance, plus an annual payment which was described as a 'lump sum' but was actually paid in 12 monthly instalments. HMRC rejected a claim to repayment of NICs. The tribunal allowed the company's appeal, holding that the payments were paid as motoring expenditure.

HMRC guidance explains that NICs are due on payments of relevant motoring expenditure (RME) above a certain level. Announcing the appeal, HMRC said it had argued that that there was no clear link between the payments made and the actual use of the vehicle by the individual employees, so the payments made were effectively additional salary, liable to Class 1 NICs.

‘Customers should be advised that the decision of the First-tier Tribunal does not form a legal precedent, and as HMRC is appealing the decision our basic position remains unchanged,' HMRC said.

'In order for a payment to be accepted as a payment of RME within the meaning of [SI 2001/1004] regulation 22A(3)(c) there must be a clear link between the payment made and the actual use of the vehicle. This has not changed as a result of the above decision and any other claims for refunds must continue to be judged on their own facts and merits in line with this position,’ it added.