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Apportioning vehicle expenses for VAT

  • Associate PM.Dip
  • Practice Licence
  • 7 posts
  • # 115066



I have just taken on a client who is a VAT-registered sole trader (they are just above the VAT threshold) and since October has been putting through all their costs for repairs, servicing, fuel etc on a car through their books. They haven't kept any form of record re business mileage and seem less than keen on starting!

I'd like some clarity on what the options are:

1. With dealing with the lack of records for what's gone through in the first instance

2. With what their options are going forward.

It appears their travel is intermittent so maybe using 45p/mile would be beneficial and claiming VAT on the fuel element. My reading is that being above the VAT threshold precludes them from doing this but I've seen different views pout forward on various forum posts.

Think using scale charge would be out of the question due to the low mileage.

Having said that, I assume they would still need to keep good records of mileage?!

If they do apportion costs going forward am I right in thinking they can claim servicing and repairs in full?

Any thoughts on a tactful way of approaching the subject as they were quite taken aback by the idea of having to record their mileage!

Finally, what system do people use for apportioning fuel for VAT purposes - do a one-off adjustment at the end of each three month period based on the usage in that VAT period?


Thanks in advance

  • Associate
  • Practice Licence
  • 116 posts
  • # 115157

Hi Sam

There's basically 3 methods:

1. Using Fuel Scale Charge

2. Full cost method (where you claim a proportion of fuel, servicing etc according to the % of business/total mileage)

3. Mileage method (where you claim £0.45 per mile < 10,000 miles pa and then £0.25 > 10,000)


4. Don't claim any VAT at all

For both 2 and 3, the client MUST keep detailed mileage records. This shouldn't be that onerous these days: as long as they have a record of all their business trips, you can plug the postcodes into an online distance calculator and work out the mileage.

It's worth bearing in mind that, strictly speaking, the client should be keeping mileage records (or at least some robust evidence) if they want to claim a proportion of their motor expenses as income tax deductable business expense anyway (never mind whether they are VAT reg or not).

If they don't want to calculate the mileage, then they have only options 1 or 4 above.

You may find these links useful. Arm yourself with the information in these and then explain the options to your client and that you are merely trying to keep them out of trouble:

Good luck :)


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