Correctness of Log Book in Spite of Minor Faults

The Federal Tax Court, BFH with decision of April 10, 2008 (re VI R 38/06) brought some more clarity to how “faulty” a log book may be that it still passes as a valid, i.e. orderly, log book for taxation matters.

[PPD_PAYTOREADMORE]

§§6 I no. 4 cl. 2, 8 II EStG determine you are to apply the 1% method to determine the private use of your car unless you want to show that you had more costs by keeping a log book. The recordings have to reasonably guarantee completeness and correctness. Minor mistakes do not lead to rejecting a log book. But is forgetting to enter one single trip, though a fuel bill was there, mean that the recordings are not plausible anymore? The tax office was persuaded that the log book was too faulty because next to the missing trip the mileage in repairs bills did not exactly correspond with the mileage in the log book.

The FG bore out that the tax office’s rejection was unlawful. Since the tax office did not give in, this case went all the way to the Federal Fiscal Court. BFH held that this fault is only minor and does not torpedo the correctness of the log book.   Deciding is, if in spite of the faults, a completeness and correctness can still be guaranteed to determine the private car usage. One missing trip is not so severe a fault that it justifies totally denying the log book. Considering the discrepancy in the mileage recordings of the taxpayer and the car repairs: It is know that the mileage recordings of car repairs are typically not precise. The mileage on repair bills can only be hint in either direction (rejection or acceptance).

§§6 I no. 4 cl. 2, 8 II EStG determine you are to apply the 1% method to determine the private use of your car unless you want to show that you had more costs by keeping a log book. The recordings have to reasonably guarantee completeness and correctness. Minor mistakes do not lead to rejecting a log book. But is forgetting to enter one single trip, though a fuel bill was there, mean that the recordings are not plausible anymore? The tax office was persuaded that the log book was too faulty because next to the missing trip the mileage in repairs bills did not exactly correspond with the mileage in the log book.

The Finanzgericht (fiscal court = first instance) bore out that the tax office’s rejection was unlawful. Since the tax office did not give in, this case went all the way to the Federal Fiscal Court. BFH held that this fault is only minor and does not torpedo the correctness of the log book.   Deciding is, if in spite of the faults, a completeness and correctness can still be guaranteed to determine the private car usage. One missing trip is not so severe a fault that it justifies totally denying the log book. Considering the discrepancy in the mileage recordings of the taxpayer and the car repairs: It is know that the mileage recordings of car repairs are typically not precise. The mileage on repair bills can only be hint in either direction (rejection or acceptance).