Company Expenses - Petrol VAT Nonsense

Can a company claim back vat on petrol purchased for an employee's *private* vehicle?

I thought it was only petrol that was put into a *company* vehicle which could be vat-reclaimed.

Yes, this is the case.

Companies have always been able to claim back the VAT element of mileage claims, and previously needed no receipts to do so.

Now, the EU have decided that receipts are necessary for ALL VAT reclaims.

For the purposes of mileage claims, what this means is that you must provide VAT receipts which show a total amount of VAT paid on fuel that is at least as much as the company is claiming back on those claims.

I think so too.

But I am now asking for a VAT receipt every time I fill up. Most filling stations always did ask if you wanted a VAT receipt anyhow, so it is just a case of saying "yes please", and then keeping it.

So if an employee claims 35p/mile, how much of that 35p is assumed to be petrol? 10p perhaps which would contain about 1.49p of vat?

Yes.

the VAT element of mileage allowances can be reclaimed.

Yes, the company can claim the VAT back as long as the driver/owner is only claiming back the Approved rate and produces VAT receipts along with the expenses claim.

He would also have to keep a mileage log book, showing the business mileage breakout.

The company then has to pay the Car Fuel Benefit as set out below.

Where the cost of ALL fuel for private use is borne by the employee, the fuel benefit is NIL. Otherwise, the taxable benefit is calculated as the car benefit percentage of 14,400 and VAT becomes payable as follows:

upto 1400cc Petrol 40.66 Diesel 38.72

This is what I do for my own company.

Is the date important? ie can the petrol receipt be several days/weeks after the business mileage, or should it be before?

Yes that's correct , up until last year the vat was reclaimable without a receipt on mileage allowance unfortunately the EU said it wasn't an acceptable practice

No any fuel that is used within the context of work which you get reimbursed for

doesnt sound a lot but if the employee does 40000 miles a year it works out around 590.00 per employee per year

I know it's an EU ruling and we don't have a choice but it really does seem very peverse. The normal reason for requiring a VAT receipt is to prove that VAT has been paid but, in the case of petrol, there's no way of buying it without VAT and no way of driving a petrol car on a business journey without using petrol, so the fact that a journey was made is itself evidence of the VAT expenditure.

Providing a VAT receipt doesn't add anything positive to the evidence that a business journey has been made because any particular receipt may well refer to a purchase made entirely for private mileage.

Does anyone know if there is any reasoning behind the decision?

Mike.

The eu argument was that private individuals cannot charge vat so the companies cannot therefore reclaim it , if they present a receipt to the company then it is assumed that the petrol was bought on behalf of the company and not charged to the company one is vat reclaimable the other isn't

Basically Brussels being stupid

In article , Steve Robinson writes

And they know all about acceptable practices don't they, how long ago was the last time the accounts were signed off?

Mike

You could have gone by train.

(It doens't matter how impractical this is for your scenario, there will be some for which it is)

tim

I`m in a similar situation, except that its my car, i`m based at a fixed location, don`t get any car allowance etc other than mileage expenses if i`m required to travel to another office for training / meetings etc (and even then its only 22p/mile !)

The company are simply refusing to pay any expense claims without a VAT receipt.

I wonder if there are any tiny one pump filling stations with turnover below the vat registration threshold? ;-)

That's a fair point. But I'm still at a loss to understand how a VAT receipt for petrol is any evidence at all that a car was used for the business journey. The receipt could have been for petrol purchased for private use, so it's value as evidence is nil.

Mike.

I claim at the maximum HMRC approved rates (I won my own company), which is 40p/mile for the first 10,000, then 25p/mile.

My accountants suggest that rather than trying to calculate exactly, a simple rule, that HMRC are known to accept, is to reclaim 1p/mile as input VAT.

In the years since I have been contracting, my mileage claims over the year have varied from about 6,500 miles (this year) up to 25,000 miles. This year is the first I will not have exceeded 10,000 miles.

So even this year, that is £965 reclaimed from the VAT man.

I'm not sure.

I would expect that it should be before or the same date, but it may be that it just has to be within the VAT period.

The actual regulations applying to this, and the HMRC VAT business briefing (neither of which make the above question clear), are here:

Do as we say not as we do