Reclaiming VAT on mileage on private car use as sole trader?


Postby deanjr on Tue Apr 18, 2006 5:31 am

Hi,
I am a sole trader and use my private car occassionaly for business travel to visit reps etc.

I keep a mileage log of business miles and believe I get a 40p a mile allowance on my tax return at end of year.

I was wondering if there is anyway to get any VAT back as I am using this method and not paying for fuel through the business.

Thanks In advance

Dean Richardson
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Postby paultaylor@vatease.c on Wed Apr 19, 2006 12:26 am

As you are not an employee of the business (you *are* the business), you have 3 options available to you:

1) Claim back the VAT on all the road fuel you buy, both for business and private use, and declare the Fuel Scale Charge on each VAT return.

2) Use detailed mileage records to calculate the split between business and private use of the car and reclaim only the VAT on business use.

3) Don't reclaim any VAT at all.

Regards

Paul Taylor
http://www.vatease.co.uk/
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Postby deanjr on Wed Apr 19, 2006 1:23 am

Hi Paul,

As I use the car 75% of time for personal I am using option 2 and recording all business mileage in a log book.

Does this mean I need to keep receipts for all petrol purchases for the year and work out VAT as the appropriate percentage? or is there a calculation I can just use to
just say X amount of the 40p a mile is VAT???


Thanks again

Dean
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Postby paultaylor@vatease.c on Wed Apr 19, 2006 1:42 am

You will need to apportion the total VAT incurred. i.e. 25% of the mileage is business therefore I can reclaim 25% of all the VAT incurred. You will need to retain all the receipts for petrol purchases.

Regards

Paul Taylor
http://www.vatease.co.uk/
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Postby deanjr on Wed Apr 19, 2006 2:19 am

Thats a bugger was going to work it back for last year.

Oh well will start keeping receipts from now on.

Thank you again

Dean
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Postby sharpener on Wed Apr 19, 2006 2:12 pm

Hi Dean, this may be what you were thinking of:

In 2004 my accountant advised that HM Customs would allow 1.9p per mile as the input VAT content of business mileage, based solely on mileage records rather than actual VAT receipts.

However since 31/10/04 I have been on the flat-rate VAT scheme so you would need to check independently that this advice and the rate are still current.

The VAT 100 form says that "if any of your previous returns declared too much VAT ... you can correct the position using boxes 1 and 4 for net amounts of £2000 or less" so if this accounting method is still allowed and you have last year's mileage records it seems you are still able to claim.
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Postby deanjr on Thu Apr 20, 2006 1:01 am

Excellent, thanks.

Will investigate further.
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Postby paultaylor@vatease.c on Thu Apr 20, 2006 1:19 am

Sharpener:

That calculation only applies where a mileage rate is paid to an employee. Dean could not use this as he is not an employee of the business.

Further, from 1/1/2006 you need to have fuel receipts to confirm the fuel bought by those employees.

Regards

Paul Taylor
http://www.vatease.co.uk/
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Postby King_Maker on Fri Apr 21, 2006 6:26 am

Paul,

Although the use of a mileage allowance for a sole trader is an Inland Revenue concession for Income Tax purposes,I am not aware that the fuel content cannot be reclaimed for Vat purposes (as for employees).
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Postby sharpener on Fri Apr 21, 2006 8:26 am

A bit tricky to argue against now that they are all part of HMRC, though I am sure there are many precedents. Here are the rates w.e.f. 1/7/07:

http://www.shout99.com/contractors/showarticle.pl?id=36852

Bonne chance!
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