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1. Taxi Drivers Association

Taxi Drivers Association

Hi NadiaHMRC know that for every £1 of income, there should be approx X pence of fuel dependant on car. And because taxis in the same general location charge more or less the same fare per mile, they can work out from the mileage, if the income matches. Of course, the taxi can be used for personal reasons, but looking at the two together gives them a fair idea on whether someone is under-declaring income (or at least needs to explain the why). I dont know what the formula is, but I will try and find out. Each taxi will be different, but I would look at the following as a yardstickGet the total mileage for the year then agree with client personal use (say 10% for the exercise but let your client decide) eg 50,000 miles45,000 miles of which you need to take into account dead mileage on returning to the rank, so 22,500 paid mileage.

I would then round that up a bit to 27,000 miles because there will be some flag downs.Divide that by the mpg and that will give you the gallons used. Then you can work out the approx fuel cost, and see if it matches up within reason to the fuel receipts.Private hire cars or hackneys with radios won't have as much dead mileage so you need to take that into the equation as well.As a taxi driver in a previous life that's how I would do it but I have absolutely no idea what the formula is with HMRC so caveat emptor. Personally I doubt HMRC would make it public knowledge.Would be interesting if you find anything out Michelle. Well I guess it depends on the personal usage, might be negligible. But no doubt they look at that, as the sales/motor exps ratio would be after private adjustment? Though what is strange is that so many cab drivers might not fill out a breakdown of expenses on the tax return, and there is no requirement to submit accounts - so how do they get the sales/motor info? I don't think they have to file anything with Town Hall?- Edited by FoxAccountancyServices on Tuesday 27th of October 2015 11:22:49 PM.

The practice that I used to work at always tried to prepare cabbie accounts (we had a lot of them) on a fuel:takings ratio of 1:8 to 1:10. One of the partners apparently spoke to an HMRC inspector and she was told that this was the ratio that they used to check cabbie's figures.We used to prepare the accounts with the figures provided by the client and if the fuel:turnover was around 1:8 to 1:10 we would be happy. If the ratio was much lower we would have a chat with the client to determine the level of personal mileage.Saying that, I do remember completing accounts with a ratio as low as 1:6.This was a few years back, so it may have changed a little with fuel price increases!. ©2007-2019 The Book-keepers Forum (BKF). All Rights Reserved. The Book-keepers Forum (BKF) is a trading division of Bookcert Ltd. Registered in England Company Number 05782923.

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