Some of the country's company car drivers are altering their cars' odometer readings to give them a higher mileage than they have actually covered in order to reduce their liability for Benefit-in-Kind (BiK) payments, claims a fleet car provider.
The company, Benchmark Fleet Services, says that company car drivers who enter false mileages are contributing to a fraud that is costing Irish businesses and the Revenue Commissioner millions of euro a year.
During December many company drivers find their annual business mileage is below that estimated at the beginning of the year, which could mean they are liable for higher BiK payments. As a result, some drivers have resorted to increasing the mileage reading.
There are 43,200 company cars that are subject to BiK payments. A proportion of these have had their odometer readings clocked upwards, says Benchmark. "We looked at 200 cars that had just come off lease. Four had mileages far in excess of that expected. When we checked their service history, we found that the cars' odometer readings had been adjusted upwards," says Shane Teskey, managing director of Benchmark Fleet Services.
The problem of BiK fraud was exacerbated last year when the Minister for Finance introduced new rules on the calculation of the tax on company cars. It also led to a reduction in the number of company cars on the road - down by 1,800 from a high of 45,000 vehicles in 2000. Despite this drop, the annual tax take from BiK has risen by €4 million.
Drivers who take the drastic step of clocking their car could find themselves in trouble, after the Revenue Commissioners confirmed that companies must keep a log of their employees' business miles and retain these records for six years. Asked about the problem of BiK fraud, a Revenue spokesman said that nobody has yet been prosecuted, although he warned those found with discrepancies in their BiK or mileage claims will be forced to pay the outstanding tax plus interest and penalties.
"We haven't identified it as a problem," he said. "But it would be something that is picked up in a normal Revenue audit."
Some drivers who are eligible either for mileage expenses or who pay BiK on a company car are also claiming for more than they are entitled to. These drivers are causing problems not only for themselves but also for their employers.
"The Revenue Commissioners will treat this practice as tax evasion and may seek to prosecute both the employee and the employer," says Teskey.
Employers and company car drivers who want to ensure compliance can use systems such as Accredis, a mileage capture system, and Tripometer, an Irish mobile phone-based system that makes the daily recording of business trips relatively simple.