HMRC mileage enquiry: what to expect and how to survive
When HMRC opens a mileage enquiry, the pattern is predictable. Here's how to prepare.
Why HMRC opens an enquiry
The Mileage Allowance Payments (MAP) regime is one of the most-claimed and most-audited expense categories in UK SMEs. HMRC opens an enquiry when:
- Your AMAP claim materially exceeds the industry benchmark for your size and sector. - You operate a fleet that mixes AMAP and AFR (company cars + personal cars) without clean separation. - A whistleblower (often a former employee) reports overpayment. - Random selection — HMRC samples ~1% of MAP-claiming SMEs each year.
Most enquiries start with a polite letter requesting documentation for a sample period (usually one tax year). The tone is neutral; do not interpret the letter as accusatory.
The standard documentation request
HMRC will ask for:
1. The mileage policy in force during the period. 2. The mileage logs for the sampled period (ideally per-trip, with date, route, purpose, miles). 3. The fleet list distinguishing personal cars (AMAP) from company cars (AFR). 4. Payroll records showing how MAPs were treated (tax-free up to AMAP rate, taxable above). 5. P11D or P11D(b) returns showing any reportable benefits. 6. Bank/payroll evidence of payments.
Response window: usually 30 days. Extensions are routinely granted on request.
What HMRC actually checks
The inspector is testing five things:
1. **Logs exist and are contemporaneous** — i.e., not reconstructed at year-end. Spreadsheet timestamps and GPS app records help; year-end Excel files don't. 2. **Mileage is plausible** — they cross-check route distances on Google Maps; a claim of 200 miles for a 95-mile round trip raises a question. 3. **Business purpose is genuine** — generic 'sales call' entries get flagged. 'Meeting with Acme Ltd, Q2 contract negotiation' passes. 4. **Commute is excluded** — home-to-permanent-workplace trips claimed as business is the #1 disallowance. 5. **AMAP/AFR boundary is clean** — no double-claiming for the same vehicle, no mixed methods within a single claim.
Common findings and the cost
**Reconstructed logs** (most common): HMRC may treat the entire claim as unsubstantiated, recover tax from the employer (employees are usually held harmless if they reasonably relied on employer process), and apply penalties under FA 2007 Sched 24 — usually 0%-30% for *careless* and 20%-70% for *deliberate* errors.
**Commute included**: HMRC recovers tax on the commute portion plus interest. Easy to calculate; usually small per claim but adds up.
**Above-AMAP rate without proper PAYE treatment**: the excess should have been taxed as wages. Recovery + Class 1 NIC + interest + penalty.
**Mixed AMAP/AFR**: typically resolved with a re-classification and proportional adjustment.
Survival tactics
Before the enquiry letter arrives
- Move to a GPS-app log so contemporaneity is unimpeachable. - Keep policy documents version-controlled with effective dates. - Reconcile P11D/P11D(b) annually against payroll, with a four-line audit trail. - Run an internal sample audit each quarter on 5 employees to catch process drift.
When the letter arrives
- Acknowledge promptly and request the standard 30-day extension if the period is tight (HMRC almost always grants). - Pull the records into a single PDF bundle organized by employee, then by date. - Add a 1-page cover note summarizing your process: how trips are captured, how they're approved, how rates are managed, how P11D is filed. - Engage a tax adviser if the sample claim exceeds £50,000 or if the inspector escalates.
During the enquiry
- Answer questions in writing, not on the phone (creates a paper trail you can later defend). - Provide what's asked, not more — additional unsolicited documents can open new lines of enquiry. - If the inspector finds a small error, fix it across the board (consistency matters more than the specific issue).
Closing the enquiry
Most enquiries close with one of three outcomes:
1. **No adjustment** — the documentation passed. File the closure letter with the tax records. 2. **Adjustment with no penalty** — usually a small commute or rate reclassification. Pay, fix the process, document the change. 3. **Adjustment with penalty** — the documentation was genuinely weak. Consider the *reasonable excuse* and *unprompted disclosure* arguments to mitigate. Engage tax counsel.
What changes after a closed enquiry
HMRC keeps a record of every closed enquiry. A second enquiry within 4 years carries higher inherent scrutiny. Mitigate by treating the post-enquiry period as a fresh-start audit window: tighten the process, document the changes, and run an internal 6-month audit before HMRC's next sample.
Bottom line
The single highest-leverage protection against an HMRC mileage enquiry going badly is contemporaneous logs — not policy quality, not documentation volume, not having the right tax adviser. A GPS app with timestamp integrity makes the most-common findings (reconstructed logs, implausible mileage) impossible to sustain. Everything else is process hygiene.