VAT mileage and companies

by **Incredulum** on Tue Nov 22, 2011 1:22 pm

An individual owns a car. He uses it for the purposes of his non-IR35 personal company that is registered for VAT. He claims his mileage from the company at the usual rates. Is the company able to reclaim any VAT in respect of the costs of running the car?

Thanks.

by **section 44** on Tue Nov 22, 2011 4:20 pm

The VAT incurred by the individual in respect of running the car would not be input VAT of the company.

by **Incredulum** on Tue Nov 22, 2011 5:29 pm

No way of squeezing any of it in. Petrol costs even?

by **Generix** on Thu Nov 24, 2011 11:03 am

section 44 wrote:The VAT incurred by the individual in respect of running the car would not be input VAT of the company.

If the company reimburses the individual and the individual provides sufficient receipts then the VAT can be recovered. Both for fuel and servicing.

If fuel then you need to keep either mileage records or pay the fuel scale charge etc.

(Or have I misunderstood the Q)?

by **mooresud** on Thu Nov 24, 2011 12:14 pm

Have a read of this:
http://www.hmrc.gov.uk/vat/managing/reclaiming/motoring.htm#6

by **Incredulum** on Thu Nov 24, 2011 3:17 pm

Generix wrote:Or have I misunderstood...

Possibly?

The individual owns a car. The individual works for their personal company. The individual drives his own personal car some on company business, and incurs fuel and servicing costs. The company reimburses the individual at 45p per mile.

If the company can reclaim any VAT on fuel then it will be worth its registering for VAT. If not, then probably not.

by **section 44** on Thu Nov 24, 2011 3:30 pm

mooresud wrote:http://www.hmrc.gov.uk/vat/managing/reclaiming/motoring.htm#6

That appears to deal with VAT incurred by the business and not VAT incurred by a different person (i.e. the individual rather than the company).

by **Generix** on Thu Nov 24, 2011 3:47 pm

section 44 wrote:
mooresud wrote:http://www.hmrc.gov.uk/vat/managing/reclaiming/motoring.htm#6

That appears to deal with VAT incurred by the business and not VAT incurred by a different person (i.e. the individual rather than the company).

But isn't the person driving on behalf of the company, if the company is funding it that would suggest to me that this should be treated as normal employee expenses?

by **towat** on Thu Nov 24, 2011 4:01 pm

A few years ago (10?) companies were able to reclaim the VAT on the fuel cost element of mileage allowances paid to their employees, i.e. about 12p per mile at the time. I remember reading about a change to the rules possibly 5 years ago that said in order to reclaim the VAT employees must supply their employers with VAT receipts for the fuel used. I have not come across this in practice since but remember thinking how difficult it would be to relate anonymous fuel receipts to mileage records.

by **Generix** on Thu Nov 24, 2011 4:08 pm

towat wrote:A few years ago (10?) companies were able to reclaim the VAT on the fuel cost element of mileage allowances paid to their employees, i.e. about 12p per mile at the time. I remember reading about a change to the rules possibly 5 years ago that said in order to reclaim the VAT employees must supply their employers with VAT receipts for the fuel used. I have not come across this in practice since but remember thinking how difficult it would be to relate anonymous fuel receipts to mileage records.

UK authorities didn't want this change, but it was actually forced upon them by the EU...as a result it is not enforced too heavily.

From a practical point of view HMRC will in the most harsh circumstances accept any number of petrol receipts in a qtr. i.e. it doesn't have to match if say the expense claims were in Feb and the receipts in March...so long as there is enough VAT shown on the receipts to cover the input VAT claim..

I think it even says something along these lines in a staff manual or public notice.