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You can only claim VAT back on the fuel element of the 40p per mile mileage (approx 8-9p per mile) and you now need receipts to show the fuel was bought within one month of the trips being claimed for.
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You can only claim VAT back on the fuel element of the 40p per mile mileage (approx 8-9p per mile) and you now need receipts to show the fuel was bought within one month of the trips being claimed for.
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Yeah thats about right. Another stupid bit of bureocracy as how can you buy not VAT charged fuel (other than perhaps Red diesel).
I have to provide receipts to my company when claiming my mileage each month.
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No, because he hasn't been charged VAT on the amount.
The employee has paid VAT, the employer has reimbursed him (and some!), so should be able to claim input tax, no? It is a matter of how it works under AMAP.
Thanks.
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This seems to answer the question
www.menzies.co.uk/news_room/tax+news/131
my interpretation is that the employer (if VAT registered) can claim VAT relief on the payments at the rates shown, provided the employee furnishes evidence of payment of VAT for his fuel.
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pmh (was peter)
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As you can't buy fuel without paying VAT, the receipt system is completely ridiculous.
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.....As you can't buy fuel without paying VAT, the receipt system is completely ridiculous......
But this is at least some evidence that the employee has purchased some fuel (whether or not he ACTUALLY used it) for travelling by car on the claimed business trip. In some circumstances it may be cost effective for the individual to travel by public transport (or as a passenger in another car) and fraudulently claim for miles! Cost effective provided he keeps his job.
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pmh (was peter)
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As you can't buy fuel without paying VAT, the receipt system is completely ridiculous.
the menzies article linked by pmh predicted this response by bill-payer:
www.menzies.co.uk/news_room/tax+news/131
" ... shouts of "rubbish" "ridiculous" together with wringing of hands and headaches ....
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Ah, after moaning about the stupidity of all this, was I really surprised to see that 'European legislation' was behind it?
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As you can't buy fuel without paying VAT, the receipt system is completely ridiculous.
That is really my view on it.
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OK thanks to all so far, so it seems that receipts are needed ............
.......... however what happens when I when I am going about my business working on behalf of a client and I use my own private car to travel, I claim the 40p a mile from my own company and keep fuel reciepts to reclaim input tax however I then need to invoice my client for the mileage I have incurred, I am not interested in making a profit out of the mileage charge so I want to ostensibly charge them the same 40p/mile:
Do I simply invoice mileage @ 40p/mile with no reference to VAT on the invoice.
Do I invoice them at 34.4p/mile plus VAT / i.e. 40p/mile inc VAT?
And if the latter do they need VAT fuel receipts from me to reclaim the input tax? I assume not and the fact that I am giving them a VAT invoice from my company is all they need.
Thanks.
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My lot will invoice mileage as a disbursement and will charge VAT on the total, so if I have had to do 100 miles @ 40p/mile whilst working on behalf of a client, the client will get a mileage bill of £40 + VAT.
If the client is VAT-registered, my understanding is the same as yours, i.e. all they will need is my VAT invoice in order to reclaim as an input the VAT they have paid on it.
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Thank Paul.
I meant to add the following to my last question;
Say I do 500 miles at 10miles/ltr at 95p/ltr so it costs me £47.50 inc vat, the reciept for fuel would only support a claim for £7.07 of VAT however 500 miles at 40p/mile = £200 the VAT element of which would be £29.79. So how does the fuel receipt support an input tax claim based on 40p/mile?
I.e. because my car is private and not on the company I pay myself expences to the tune of £200 and then as a VAT registered company try to claim input tax of £29.79 though only have receipts accounting for £7.07?
Any ideas?
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Any ideas?
They way I've always understood it is that your employer is paying you an allowance of 40p/mile which is intended not only to reimburse the cost of the fuel but also as an element of compensation for wear and tear, maintenance, depreciation and so on.
Using your example, you do 500 miles at 40p per mile. Assuming that this is recharged to clients at cost, the client pays £200 + VAT, so your employer has not, in effect, had to put hand in pocket. (Some firms who I use in a professional capacity to do certain things even add a margin to their mileage charges, so whilst the guy who's doing the running around gets 40p/mile, I end up getting billed at 70p/mile. A bit cheeky, but there you go.)
You submit your expense claim for £200 with a supporting VAT receipt for £47.50-worth of diesel. The employer is entitled to reclaim as an input the VAT on the fuel you have bought, i.e. £7.07.
This actually puts your employer in a slightly better position than they were, inasmuch as they have charged the client £35 by way of output VAT, of which they have only had to pay £27.93 over to HMRC.
(I suppose the other way you could look at it is that the mileage claim that puts £200 in your pocket has actually only cost them £192.93. )
I strongly suspect that the insistence since the beginning of last year on receipts being submitted has as much to do with certain people taking the mick with claims in the past, as it does with EU regs.
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That makes sense - our accountant told us it was such small beer (for 3 cars) that it wasn't worth bothering with.
Clearly you can't claim back a greater amount of VAT than was paid in the first place.
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Clearly you can't claim back a greater amount of VAT than was paid in the first place.
That is in effect what VAT is about, the value added bit, in the scenario outlined by Paul £7.07 becomes £35.
However I am otherwise advised that I can claim input tax to the tune of 17.5% of a 40p/mile expense claim therefore while the expense claim for £200 with a supporting VAT receipt for £47.50 of diesel accounts for only £7.07 as a business I am entitled to reclaim as input tax the VAT element of the £200 i.e. £29.78, is this right?
In which case a mileage claim that puts £200 in an employee's pocket would actually only cost the employer £170.22.
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.. However I am otherwise advised that I can claim input tax to the tune of 17.5% of a 40p/mile expense claim ..
cheddar - is that advice from hmrc-customs or from a professional accountant or ? ?
the customs official info is here: see section8 - 8.5, 8.7, 8.9
tinyurl.com/yq6e3z
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is this right?
I don't think it is, no.
I've had a quick look on HMRC's website (mainly to refresh my own memory on these things) and as far as I can understand it the situation is this (slightly more complicated than in my previous post - apols for the bum steer, but VAT specialist I ain't):
Where a mileage allowance is paid, it is only possible to recover input tax on the fuel element of the allowance, by reference to the current advisory fuel rates:
www.hmrc.gov.uk/cars/advisory_fuel_current.htm
Assuming it's your Mondeo TDCi that you're using (1401-2000cc, diesel), it's 9p per mile. Therefore, using the example of 500 miles that you gave earlier, your fuel element is 500 miles x 9p = £45.00.
The VAT element of this (and thus the reclaimable input) is £45 x 7/47 = £6.70.
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That is in effect what VAT is about, the value added bit, in the scenario outlined by Paul £7.07 becomes £35.
Correct - the firm is adding 'value' and therefore the VAT charge to their customer is higher. But they're not claiming back the £35, they're paying £35, less the £7.07 they can deduct.However I am otherwise advised that I can claim input tax to the tune of 17.5% of a 40p/mile
No. It's 17.5% of the fuel element of that 40p, not the whole 40p!
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No. It's 17.5% of the fuel element of that 40p, not the whole 40p!
Aha of course, many thanks all!
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Aha of course, many thanks all!
aha, aha, aha. i have ben wondering all along what the perceived problem was, as i had thought the reply as below by daveyjp (posted at 8.34am) had it solved:
"Employees car/business miles - VAT Q? - daveyjp Tue 20 Mar 07 08:34
You can only claim VAT back on the fuel element of the 40p per mile mileage (approx 8-9p per mile) .."
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i have ben wondering all along what theperceived problem was, as i had thought the reply as below by daveyjp (posted at 8.34am) had it solved:
I was thinking that I was getting contradictory advice from here and elsewhere however it was Bill P mentioning the 17.5% of the fuel element of that 40p, not the whole 40p that clicked, likewise Paul B made the same point as did - you rightly say - daveyjp this AM.
However I am not sure that this answers my question, the HMRC Advisory Fuel Rates for Company Cars relates to just that, company cars, I dont think that this also provides the fuel element in respect of the business use of a private car, this is covered by the Approved Mileage Allowance Payment scheme, on here: www.hmrc.gov.uk/manuals/senew/SE30058.htm it says:
"These changes do not affect dispensations for business mileage payments (normally based on fuel costs) to employees with company cars. "
Which makes me think that it is different for private and company cars in this respect.
On the otherhand the earlier Menzies article does not differentiate between private and company cars.
I think a call to HMRC will be required.
Many thanks to all.
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Cheddar, if it's any help, my firm uses the AFRs irrespective of whether the car is the firm's or my own, so it must be the same for both. Every mileage claim I do I have to specify engine size and fuel type.
Let us know what HMRC say, though, if you do give them a call.
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Cheddar, if it's any help, my firm uses the AFRs irrespective of whether the car is the firm's or my own, so it must be the same for both. Every mileage claim I do I have to specify engine size and fuel type.
Have you opted out of a company car, i.e do the company pay you in lieu of a company car? That could be why.
Let us know what HMRC say, though, if you do give them a call.
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Will do though it will probably be Thursday.
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Phoned HMRC, it is apparently a technical question so I have now e-mailed them, will post back when I get a reply.
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