Claiming VAT on Mileage

[New2011]

Hi all,

Im new to contracting world and Im doing my bookkeeping on my LTD co.
Im trying to work out VAT on mileage. I have two options i think..

Option 1)Basically do i claim VAT on all my fuel receipts?
i.e Mileage 600miles *0.45 = £270 total expense. £60 fuel. VAT £10 I claim £10 VAT.

or
Option 2)do i claim VAT on my mileage?? This is the formula given by my accountant..
i.e. 600miles * 0.45 = £270 Total expense * 0.25/6 and i get £11.25 VAT

Which one is correct?? My accountant is telling me option 2. because i do not drive a van. which is weird?? i didnt know it makes a different. but they said it can cause all sorts of issues if Taxman sees option 1 on a LTD co.

wots everyones opinions?? im thinking option2

[DaveB]

Option 3. Register for the Flat Rate Scheme, forget about having to work it all out and end up a couple of hundred pounds a month better off.

[Sockpuppet]

Are you on the FRS? If so it doesn't matter as you don't claim on receipts.

To claim VAT on mileage you need to use the fuel rates published by HMRC then you need a receipt(s) to cover at least the amount of VAT that you are claiming.

With company vehicles either:

a) company owns the vehicle and pays for fuel. You then pay BIK tax on this.

b) company owns the vehicle. You claim fuel mileage rate only from company for BUSINESS miles that you do. You still pay BIK tax but a lesser amount just for car.

c) you own the car and you claim 45p a mile up to 10,000 miles. No BIK tax to pay.

Finally, first search I've covered this times and also trust your accountant. They are usually on the money.

[New2011]

Update of the thread

Hi all,

I own my car and its a diesel. Whats a FRS???

[Sockpuppet]

Click Me

[New2011]

thanks sockpuppet