Mileage case

Total People has won its appeal to the Court of Appeal overturning a decision in favour of HMRC at the Upper Tribunal (UT).

The decision restores the finding of the First-tier Tribunal (FTT) in August 2010 in favour of Total People and sets aside the opposing decision of the UT in August 2011.

The case relates to a national insurance refund claim based on the difference between the HMRC 40p per mile allowable rate and the 12p per mile paid by the employer plus an additional lump sum paid to the employees for using their private cars on business.

At the Court of Appeal, HMRC made a new contention that even if the lump sum payments were not paid as salary they were earnings because they were over generous and involved a profit element for the employees.

Total People's appeal was based on the point that the UT made an erroneous judgement and that the FTT decided in its favour.

The Court of Appeal judges concluded that the FTT had made no error in law and therefore the UT had no jurisdiction to overturn the FTT decision. Lord Etherton said that Total People's ‘scheme for travelling allowances is not an abusive one’ and that ‘critically, it (the FTT) found as facts that the scheme was a bona fide scheme, that the lump sum element was designed precisely in order to prevent staff making a personal profit by maximising their travel on a 40p. per mile basis’ and that the FTT was fully entitled to conclude that ‘the lump sum payments were not earnings’.

Grant Summers, partner, Grant Thornton UK, said: ‘The Court of Appeal has re-reviewed this complex issue from first principles and reached a convincing conclusion to this long running saga.’