Had a meeting with a client yesterday, previous accountant was allowing 40p per mile for his business miles plus Capital Allowances on his car (proportioned for business and private use). I was under the impression that you could only claim capital allowances if you are claiming a proportion of the running costs. Can anyone clarify this for me.
I don't know about capital allowance on the business proportion (logic re the HMRC would tell me 'no way!', but I do not know). However, bear in mind that it is 40p up to 10,000 miles a year. 25p over that. I got those figures direct from HMRC website at the time of this post.
the 40p per mile for the first 10k 25p per mile thereafter is compensation for the use of the clients own car. Capital allowances assumes that the car is being run through the business.
Offering both seems as though the previous accountant was giving the client the best of all worlds and would certainly need further investigation to determine why the accountant allowed, or even encouraged such.
If your client is a limited company then there is no problem with mileage allowance but if the client is self employed and breaches the VAT registration limit then mileage allowance is not an option open to them.
Could it be that the client breached the VAT limit during the year and was swapped over from one method to the other but your client believes that they were actually being allowed both?
Another question relates to the VAT inherent in the mileage allowance. If that crops up have a look at this thread for further guidance.
Always ensure that your client keeps a mileage log detailing every journey claimed for. Also, if the client want to claim VAT then VAT receipts sufficient to support the claim must also be kept.
Good luck and talk soon Jane,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I was aware of everything you have both mentioned, just very confused to find an accountant allowing this and wanted to check I was not missing something.
