Rha Tackling The Confusion Of Overnight Allowance

The issue of overnight allowances for long-distance lorry drivers is proving to be a contentious one that is starting to dominate headlines in transport industry news. The introduction of a new system for assessing ‘bespoke’ overnight allowances by HM Revenue and Customs (HMRC) in April this year left the Road Haulage Association (RHA) aghast by what it considered to be a damaging policy for the industry.

Since then the RHA has been urging HMRC to make it clearer as to what exactly it expects from employers in terms of the evidence of costs. Following talks between representatives of both organisations last month, HMRC has bowed to pressure and begun the process of reviewing its guidelines. So how did this furore come about in the first place?

Upsetting the Status Quo

Before the changes in April, employers were obliged to be in a position where they could, as the RHA put it, “…demonstrate that on all occasions the allowance was correctly claimed – that the driver was away in a subsistence position.” This arrangement had been the status quo for 26 years, and had been to the RHA’s satisfaction. The allowances covered expenses of up to £26.20 incurred by long-distance drivers when their work took them away from home overnight – claims for food and parking were permissible.

In April, however, against the advice of the RHA, HMRC decided that industry operators would have to apply to them for an Approval Notice if they wished to pay allowances without tax and national insurance being deducted. An additional proviso of any application for an Approval Notice stipulated that an employer would have to be able to demonstrate that they employed a checking system to prove that any expenses being claimed by their employees were definitely being incurred. Documentary evidence, including receipts, drivers’ log sheets and expenses claims, would also have to be produced. It was this measure which particularly aggrieved the RHA, and brought about a dispute which has been creating column inches in transport industry news publications ever since.

Fundamental Flaws

After accusing HMRC of a lack of clarity about what exactly was demanded of employers, the RHA swiftly condemned the new bespoke allowance system as “fundamentally flawed” and unworkable in the long-term. Its current recommendations are that the old system should be restored – albeit with a new requirement of drivers to declare that they have incurred expenses – and that the limit of £26.20 should be preserved for now.

Despite HMRC’s recent decision to redraft its guidelines, the RHA has warned that if HMRC fails to revise its policy and make its requirements sufficiently clear, the dispute risks coming before the Tax Tribunal. The resulting uncertainty of this potential outcome is bound to unsettle the industry – and continue making transport industry news.

Norman Dulwich is a Correspondent for Haulage Exchange, the leading online trade network for the road transport industry. Connecting professionals across the UK and Europe through their website, Haulage Exchange provides a valuable service, updating members with the latest information on issues affecting road safety, fuel costs, technology and transport industry news. Matching delivery work with available vehicles, over 4,500 transport exchange businesses are networked together through their website, trading jobs and capacity in a safe 'wholesale' environment.

License: You have permission to republish this article in any format, even commerically, but you must keep all links intact. Attribution required. Republishing formats.


Comments



Most Read



Using this website means you accept our Terms and Privacy Policy. Content published by users is licensed under their selected license.

Please be vigilant when exploring external websites linked from the articles/ads/profiles on this website.

© otherarticles™ 2017 | Site images and design © to Otherarticles (OA).