How to spot mileage fraud
If you are using pieces of paper for mileage expenses then build a quick and simple expenses spread sheet in excel and use this for mileage expenses. Make sure you request enough information to complete a full analysis. ie post codes, dates, start and end address, distance etc. Take the mileage expenses submitted from your drivers and insert the into a spread sheet for analysis.
Look out for the following
- Very high business mileage over the course of 1 year. The average road speed in urban areas is between 12mph (London)* and 30 mph (Wales)* . Think about your users and ask if it is feasible to drive so many miles. Remember there are approx. 240 working days in a year, meaning that 60,000 miles at 21mph (the average of the spread above) would take up 11 hours per day.
- Very low personal miles. If one of your drivers is claiming to drive 2,000 business miles per month and less than 100 personal miles you should question this. HMRC would expect to see a 60/40 split of business to private anything less than this is not necessarily wrong it just needs questioning.
- Check the journeys: Firstly you need some details to work with, as London to Manchester is just not good enough. Driving from the south of London to the north of Manchester could be as much as 50 miles different to a trip from the north of London to the south of Manchester. You need post codes or full addresses to work with. Once you have these check them against google to see if they are within a reasonable margin.
- Don’t just trust google. We are certainly not saying that google should not be trusted we are just saying that google maps does not have local knowledge. Consider local knowledge in you calculations. There are thousands of examples where google will take a route along a motorway however you know that during peak hours this route is madness. There are plenty of examples where the opposite is also true. Run a sense check on your analysis before you question a trusted employee over mileage only to find it’s a matter of lack/knowledge of the local area.
- Check for irregularity. If you have thousands of mileage claims then 100% accurate claims should show a reasonable level of similarity, whereby an equal number of claims should end in 1,2,3 and so on up to 10. If you see large spikes at zero or five or ten then it may show that estimation is being used. This can be a sign that drivers are making up mileage.
- Check your fuel card statements. You may be surprised that users will make up mileage; we have come across situations where vehicles have been sent back to leasing companies after 3 years with 30,000 less miles on the odometer than claimed in mileage expenses. The only way this can happen is if journeys and mileage have been made up. Check journeys against mileage records. Is a driver claiming to be in an office at the same time as filling up their car near their home over 200 miles away?
- Check odometer readings. There are lots of ways to check an employee’s odometer reading. Get users to take a photo on their phone and send it, if your car is leased then ask the leasing company what the last reading was when you had a service, tyres, maintenance, fuel etc. Check the odometer records against your mileage expenses. Is there a disparity where mileage claims are rising higher than odometers?
- Low or High MPG delivery: Check your drivers MPG if you are able. This can be worked out using fuel card records combined with mileage claims. If your drivers MPG is well below what you believed it should be then your drivers could be using fuel cards to fill up other vehicles other than the one designated for their use. If drivers are submitting receipts for fuel and being reimbursed for business mileage also checks their MPG is not incredibly high. Some drivers have been known to claim more miles than it is possible to travel on their fuel receipts even with the most efficient vehicles available.
- Differing rates: simply check claims for a period of say a year and check the correct mileage rate has been applied. If you are using a simple claim system it may be possible for driver to gradually “sneak” the rate up a little.
- Receipts for different fuel type: If you are using fuel receipts as part of your claim process check they look right. It’s incredibly easy to pick up a disguarded receipt from a forecourt, friend or relative that has a much higher amount of fuel purchased on it than the actual amount purchased. Check that the fuel type is correct and also check you don’t have two receipts only minutes apart with differing amounts.
- Fill up patterns: When undertaking client audits PEAK Mileage often come across incredibly low personal mileage on a claim. Certainly low personal mileage is quite possible and its existence is no guarantee that expenses fraud has been undertaken, however it is worth considering against other factors. One example we came across recently was a driver who worked a normal 5 day week, claimed 50,000 business miles per week and only around 600 per year of personal travel. When we started to look at fuel purchases however the majority of fuel was purchase by filling the tank on a Friday and a Monday. So where was the full tank of fuel going over the weekends?
*data from Department for Transport Road Transports Forecast report 2013