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I am happy to take this off line but has anyone experience and de facto knowledge of claiming the VAT back from Mileage expenses.
My clients either have a van or a personal car and track their actual business mileage using a form I have given them. (I use this to). My clients are either sole traders or directors of limited companies, but I assume the following applies to companies with employees claiming mileage expenses.
The ones using a form claim back 45p a mile from the business. Now I read and investigated about claiming the VAT back from the fuel part of the 45p. I have read VAT notice 700/64 Motoring expenses and called HMRC, I have also read various things on the internet. As far as I see there are 4 options and perhaps people can say if they have implemented options 2-4. Moving towards 1 at the moment but every penny helps.
1- Just don't worry about claiming the VAT not worth the hassle (One of the HMRC advice options!)
2-Using notice VAT notice 700/64 section 8.4 using the business and private mileage
If for example, your records show that the total mileage is 4290, of which 3165 is business mileage, and the total cost of the fuel is £250:
The cost of the business mileage is £250 x 3165/4290 = £184.44
The input tax is £184.44 x 7/47 = £27.46 (VAT at 17.5% in HMRC example!)
The cost of the private mileage is £250 x 1125/4290 = £65.56
This method means keeping all fuel receipts and mileage (I assume at the beginning end of the month you can record your mileage and then track business mileage)
I thought this may be difficult to get clients to do this.
3- Using notice 700/64 section 8.3 and 9 – Fuel scale charge.
I got the lady at HMRC to explain this several times but I am not sure whether I still have it right.
A scale charge is a way of accounting for output tax on road fuel bought by a business that is then put to private use. If you use the scale charge, you can recover all the VAT charged on road fuel without having to split your mileage between business and private use. Until 2007 the charge was based on engine size and the type of fuel used, but with effect from Budget 2007 it is based on carbon dioxide emissions.
So My car has co2 emissions of 169 g/km. That means that each quarter if I pay (output tax to HMRC) £38.13 I can claim back ALL the vat on all the fuel I buy whether it is private or business. That means it may be worth doing if I spend more than £190.65. I have JUST check latest fuel scale charges at http://www.hmrc.gov.uk/budget2011/overview.pdf#page=233%20 and it is now (FOR my car) £63.12 which means I would have to spend in a quarter £315.62 a quarter on Fuel – NOT Worth the bother in my case.
I assume you still claim the 45p a mile and the fuel bills are not a business expense just kept for your business records. (HMRC didn’t know that part just the VAT person I was speaking to)
4- My preferred option but I am not sure that I can do this. HMRC said no put I have seen many articles on the internet about this.
Part of the 45p a mile is of course fuel and therefore you should be able to claim the VAT on that PART of the 45p. One article lead me to here http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm but I think it is company car rates but let’s assume they are about right.
Therefore for my car 18p of the 45p is fuel. Therefore I can claim the VAT back on the 18p part of the mileage. Therefore if I do a 100 miles I claim £45 pounds as expenses and therefore I can claim VAT (100 *.18 * vat part) = £3 back on VAT – As I understand it I would have to have fuel receipts showing that I had bought at least £18 of fuel showing the VAT.
If this is this is the case I was going to set o a new VAT code for mileage in sage equivalent to 6.6666% (£45 * 6.6666% = £3).
If someone does use this can they point me in the direction of the correct part on HMRC for the % of 45p
THANK YOU for reading this.
Regards
Clare
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