HCOS4425 - Post detection audit and assessment: calculating mileage and fuel usage
Miles per gallon (MPG) / litre
Mileage
Special Investigations (SI) staff should have identified the vehicles registered to the business and recorded the current mileage of all vehicles tested on the Vehicle Record Sheet. It is important to identify and calculate the mileage for all vehicles operated by the business. It is NOT just those testing positive that are to be included in the calculation. The assessment method is to calculate the total fuel usage of the business and deduct purchases of legitimate fuel to reveal mileage done using rebated oil. You should look at purchase records for the business. Invoices, eg for maintenance / repair, might reveal other vehicles used during the period, eg hired vehicles / vehicles that have been sold.
You should also include any diesel vehicles privately owned by the trader as these will probably been fuelled from business stock, or if not, fuel receipts for diesel put into the private vehicles might be claimed as business fuel receipts. No assessments should normally be issued for private vehicles (see below).
(This text has been withheld because of exemptions in the Freedom of Information Act 2000)
Private vehicles
(This text has been withheld because of exemptions in the Freedom of Information Act 2000)
It may however become necessary to take account of the use made of a private vehicle and of the mileage that it has travelled, where receipts for the purchase of duty-paid diesel have been produced, which includes purchases for the private vehicle, or the vehicle has been fuelled from bulk stocks of duty-paid diesel, and where it is not possible to identify from the receipts or from the supply records which vehicle that any purchases or supply relates to.
In these circumstances, it would be necessary to establish the mileage performed by the private vehicle, in order to eliminate these.
Where it is necessary to take account of private vehicles, it may then become necessary to establish or to estimate their usage and mileage.
All private vehicles over three years old are required by law to have an annual MOT. The most recent certificate must be retained. This records the mileage of the vehicle at the date of the MOT. If no other records exist, mileage can be established by deducting the mileage on the MOT date from the current mileage and dividing by the number of days in between. This daily mileage figure can be applied to the full period of the assessment. This method has been upheld at Tribunal.
If the offender does not produce the MOT certificate you can estimate the mileage. Use whatever information about the vehicle that is available, eg from the interview record. If no other information is available you can use the AA estimate that private cars travel an average of 14,000 miles a year.
Vans
Vans may clearly be for commercial use although claimed to be private. If suspicions held that the vehicle is used in business, please note that if registered for Self Assessment (SA) of income tax, owners will be required by direct tax law to retain fuel receipts which must be produced to us for inspection.
Taxis
Taxis have to undergo regular safety checks in order to retain their licence. MOT certificates, including mileage figures are held by the local authorities which may provide them if requested.
Heavy goods vehicles (HGVs)
HGVs do not have MOTs showing mileage figures. However, mileage figures are available from a number of sources. Tachographs (see below) are the most familiar source but other records held by the operator can also provide this information. HGV operators must put their vehicles through regular maintenance checks as a requirement of their licence. They must keep maintenance records and these will record the mileage figures. Invoices for repairs and new tyres also record the mileage.
It is possible, although time consuming, to calculate the mileage using the destinations shown on sales invoices or from the interview notes, if the trader gave information about the type and extent of work done.
Tachographs record the start and end mileage for each day. HGV operators are required by law to keep them for a year.
If a trader supplies a year's worth of tachographs there will be a lot of them and the task will appear daunting but obtaining the mileage figures is not as difficult as it looks at first. The opening and closing mileage on the first and last tachograph for the period is all the information you need, although you must check through them to see if the tachograph recording head had been changed during the period, in which case you will have more than one set of opening and closing mileage figures. Sort out the tachographs by vehicle registration numbers and then into date order. You should then be able to obtain the mileage figures quite easily.
Note: tachographs are recorded in kilometres. You will need to convert the figures into miles, ie by dividing by 1.6093 ( 1.6093 Kilometres = 1 Mile).
If not all the tachographs are available, you should use what figures are available to calculate daily mileage figures and apply these to the whole of the assessment period.
If the trader fails to produce any tachographs, you may still have the chart from the vehicle and the last seven day's tachographs, uplifted at the time of the detection. If no other information is available you can use the mileage figures from these and apply them to the full assessment period.
Another source of information that can be used to establish mileage is the trader's annual accounts which can be obtained from Local Compliance - Revenue / VAT.
Information on VISION may be useful and can be used to calculate mileage. A low input tax to output tax ratio may indicate the use of rebated fuel which is cheaper and has less VAT on it. To calculate mileage you should first establish (eg by contact with similar local businesses) how much the going rate per mile for haulage is. Then divide the outputs figures on VISION by the £ per mile charged to give the number of miles.
In the absence of sufficient information from the trader to enable a reasonable calculation of a commercial vehicle's mileage, assessments should be based on the following Department of Transport (DoT) average kilometres:
- rigid vehicles - 37,000 kilometres
- articulated lorries - 92,000 kilometres
- all other vehicles - 52,000 kilometres.
Miles per gallon (MPG) / litre
Once you have established the mileage travelled by each of the trader's vehicles you will need the MPG figure for each vehicle to calculate the number of gallons of fuel used for comparison to the amount of legitimate fuel purchased. The trader should be asked for MPG figures for all vehicles during an interview. MPG rates will vary according to the make and model of the vehicle, its age, what load it is carrying, the type of journey and how it is driven. Road Fuel Testing Units (RFTU) have MPG figures from the manufacturers for a wide range of makes and models of vehicles which you can use but ideally a realistic MPG figure should be agreed with the trader.
A Commercial Vehicle Fuel Consumption Table which shows typical fuel consumption in miles per gallon for a number of vehicles has now been published on the HMRC Intranet pages.
