Lump sums motoring expenses

The taxpayer company claimed a refund of overpaid National Insurance contributions for the years 2002/03 to 2005/06. It provided placed apprentices and trainees with employers and supervised their training.

Total People Ltd employed around 160 advisers who had to visit the employers and trainees at their places of work. This entailed a lot of travelling which had mostly to be done by car.

Mileage allowances were paid on a straightforward mileage allowance basis or as a smaller mileage allowance plus an annual lump sum paid in monthly instalments.

Initially the company paid National Insurance contributions on the lump sums but later claimed this was incorrect.

HMRC rejected the claim on the basis that the lump sum payments constituted earnings.

The First-tier Tribunal found that the contracts of employment did not show the lump sums as part of salary. Rather the company’s travel policy was...