HMRC has confirmed that it won’t appeal its recent legal defeat over grey fleet NIC claims, potentially now paving the way for multi-million-pound UK claims.

HMRC’s decision to not appeal the ruling opens the way for similar claims; but Innovation says claimants need a robust mileage system

The tax authority had until 4 September to lodge an application with the Court of Appeal after the Upper Tribunal Tax & Chancery ruled in July that it had wrongly refused tax relief from national insurance payments paid on car allowances.

The ruling actually related to two separate and long-running legal battles between HMRC and Willmott Dixon and Laing O’Rourke Services, which eventually saw both firms successfully argue that cash allowances paid to drivers were not earnings but instead Relevant Motoring Expenditure and therefore do qualify for relief from Class 1 NICs.

The claims, which date back 13 years, equate to £2.2m of NIC relief for Laing and £1.5m for Willmott Dixon. Both cases had a basis in a legal precedent that dates back to 2012, when Total People Ltd (later called Cheshire Employer and Skills Development Limited) won a seven-year battle against HMRC in the Court of Appeal over its car allowance payments to staff.

Innovation Professional Services, the firm behind the joint hearing and who advised both Willmott and Laing over the full 13-year period, has said HMRC’s decision to not appeal “is great news for taxpayers” – both fleets and drivers themselves – who can now push ahead with similar claims. But it’s cautioned that “there is a catch”.

John Messore, managing partner at Innovation, commented: “I cannot explain how happy I am at this result. It started with my writing articles on the Total People cases in 2010 and 2011. I attended Court in 2012 to see the Court of Appeal case in person.

“We had a client conference hosted by Graham Aaronson KC looking to have a class action.

“We eventually had two clients willing to be test cases. One sadly went with another instructing agent and lost at the First Tier Tribunal (FTT), but our other client stuck with us and our barrister Rory Mullan KC to win at FTT and I made sure both appeals were heard together to improve the chances of both Laing and Willmott winning together.”

But the company has warned that while HMRC accepted the annualised calculations of the claims for Laing and Willmott, it’s “almost certainly” going to expect calculations for any new claims based on ‘earnings periods’ which most likely are monthly but could also be weekly or four-weekly. And it’s said that the best way to successfully claim going forward is to have an automated mileage tracking system such as Traxmiles – provided by Innovation.

Messore picked up: “HMRC will make it difficult for any new claimants to succeed, which is why all taxpayers need a robust mileage system combined with the relevant tax expertise to ensure success.

“Also, any new claims can be time-consuming but Innovation is uniquely set up to help all taxpayers submit and quantify claims as well as ensuring eventual payout to both the company and its staff. We are even happy to look at no win, no fee situations.”