Petrol VAT

[VectraMan]

I know this probably doesn't apply to most of you, either because a) you like to pretend you're no different than the poor people by taking public transport, or b) you're on the flat rate scheme, but I don't do either.

I claim the 2p per mile VAT on mileage, but you have to get VAT petrol receipts to cover at least that much. This was no problem in my 25mpg car, but now I have a 35mpg car it's a pretty close run thing, with September's receipts being a whole 4 pence short.

Just wondering what other people's experience was. Surely anyone with a diesel or God forbid some kind of ecomentalist friendly hybrid isn't going to get anywhere near the 2p per mile allowance?

[Ardesco]

Never bothered with it personally. I just have my own car that I use and then claim milage back from Hector. I don't have a company car hence no VAT on fuel. I find the 40p/mile is the best return i'll get (May change if you do silly miles per year though, I haven't bothered working out how much I can claim one if hit the milage limit for the 40p and drop down to 25p).

[VectraMan]

Never bothered with it personally. I just have my own car that I use and then claim milage back from Hector. I don't have a company car hence no VAT on fuel. .

Unless my accountant has made a big mistake, your company can claim back VAT on fuel used for your own car.

[malvolio]

Basically yes - put the mileage claim in as personal expenses as usual. When you put that value through the books, split it as 38ppm for expenses and 2ppm(-ish, I usually play safe and claim 39/1ppm) for VAT. The revenuemen will not complain.

[martinb]

Basically yes - put the mileage claim in as personal expenses as usual. When you put that value through the books, split it as 38ppm for expenses and 2ppm(-ish, I usually play safe and claim 39/1ppm) for VAT. The revenuemen will not complain.

I think is what VectraMan is doing already. As he states, though, Hector now requires VAT receipts to back up the VAT bit (the 1p or 2p or whatever).

Not sure whether you have to do it on a month by month (or quarter by quarter) basis though, or if your total petrol VAT receipts for the year will suffice. Presumably if you do enough private (non business related mileage) that means the receipts will exceed the amount you claimed as business mileage.

[malvolio]

If them's the rules, them makes no sense....

Say I claim 25 miles for business use of my car, I won't have bought a gallon just for that journey. If the VAT man wants me to prove I've bought petrol for my own car, some of which has been used and reclaimed as business mileage, he can go whistle.

However if you're claiming VAT back on business fuel for a business-owned vehicle, or are paying your staff's petrol costs (or both), then I can see the need. Just...

[Ardesco]

Guess I need to go have a chat with my accountant, I was under the impression that you just claimed back 40p per mile and forgot about VAT unless it was a car owned by the company. In which case the company would pay for all the petrol and claim back the VAT and you then had to work out if any of that was classified as a benefit.

[martinb]

Guess I need to go have a chat with my accountant, I was under the impression that you just claimed back 40p per mile and forgot about VAT unless it was a car owned by the company. In which case the company would pay for all the petrol and claim back the VAT and you then had to work out if any of that was classified as a benefit.

My understanding is that of the 40p you claim back, the fuel element of this is subject to VAT and reclaimable. However, if you're on the flat rate it doesn't make any diofference. If you do "standard" VAT then you will reduce your VAT slightly by correctly accounting for this small amount of VAT

[tim123]

It isn't the VAT man wanting proof that you you have put petrol in you car. It's an EU court ruling that VAT can only be claimed back with a receipt, even when the money is paid using a scale charge.

tim

[martinb]

If them's the rules, them makes no sense....

Say I claim 25 miles for business use of my car, I won't have bought a gallon just for that journey. If the VAT man wants me to prove I've bought petrol for my own car, some of which has been used and reclaimed as business mileage, he can go whistle.

However if you're claiming VAT back on business fuel for a business-owned vehicle, or are paying your staff's petrol costs (or both), then I can see the need. Just...

Unfortunately thems the rules for business use of private cars.

The requirement to be able to produce VAT receipts is quite new - introduced this year I think.

I agree that it doesn't make sense - but since when did HMRC rules ever make sense?