In Amara Akhtar v HMRC [2020] TC7646, the First Tier Tribunal (FTT) found that a mobile care workers' mileage allowance relief claims were inaccurate but that the penalties charged should be reduced and suspended.

Mrs Akhtar was a mobile care worker. As she received no mileage allowance from her employer she claimed mileage allowance relief on her travel to visit clients and run errands for them at the approved mileage rates over a four-year period.

  • As she had difficulty reading and writing English, one of her elderly clients prepared her tax returns for her which she signed without checking.
  • She did not keep mileage records but her car MOT records provided some insight into her mileage.
  • Following an enquiry, HMRC amended her tax returns and reduced her mileage claims based on information gained from her employer in respect of one working week, annualised it and applied it to each of the relevant tax years.
  • HMRC found that the amounts of tax deducted under PAYE were incorrectly reported in her tax returns.
  • They issued penalties in respect of the PAYE errors on the basis they were deliberate prompted errors and penalties in respect of the mileage claims as careless prompted errors.

The FTT found, based on the evidence presented, that the correct allowance mileage figures were higher than those used by HMRC to amend Mrs Akhtar’s tax returns but were still not the figures included by Mrs Akhtar in her returns. The PAYE figures in her returns did not agree to her P60’s and were also wrong.

  • Her allowable business mileage included home to work travel. This was not ordinary commuting as HMRC claimed. Her employment contract expected her to work at a location within a reasonable travelling distance of her home. That 'area' was a permanent workplace and that made travel between home and her first and last clients of the day travel within the 'deemed' permanent workplace and not travel between home and a permanent workplace.
  • The PAYE errors were not deliberate but there was a failure to take reasonable care and her disclosure of these errors was prompted. The tribunal reduced the penalty amounts from 37.5% to 17.25%.
  • The judge agreed with the penalty categorisation of the errors on the mileage claims and so with the percentage reductions used by HMRC but he reduced the penalties based on his calculation of the number of allowable business miles.

The FTT said HMRC’s decision not to suspend the penalties was flawed and ordered HMRC to suspend them all.

  • Conditions could be made to avoid further inaccuracies such as keeping proper mileage records and using someone more appropriate who spoke her native language to prepare her tax returns
  • On the mileage claims, HMRC had said they could not suspend the penalties because she had not given any indication that she agreed to bring her tax affairs up to date but the tribunal found no evidence of this.

The tribunal reduced Mrs Akhtar’s penalties from £9,738 to £4,512, moving them from payable within 30 days to suspended indefinitely, as long as she met the conditions of suspension. It was also able to reduce the tax due by £722 as a result of the judge's recalculation of the mileage claims. 


Travel (summary for employees)
This guide summarises the basics for employees. 

Travel (employer's guide)
A detailed guide for employers on employee travel expenses

Authorised mileage rates (own vehicle)

Subsistence (employees)
What is subsistence? Subsistence is the tax term for food and drink. It is an expense that is normally incurred in conjunction with allowable business travel or a business trip including accommodation.

Penalties: Errors in Returns and Documents (subscribers)
What penalties apply if you make an error or mistake? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

External link

Amara Akhtar v HMRC [2020] TC7646