I wonder if anyone can kindly assist. Some chauffeurs have got together in a new partnership which has been registered for VAT. Is it permissable, and is there an option, to just claim input VAT on the business mileage element for the cars expenses, mainly petrol, (based on the business % from mileage records) without doing all this Car Scale additional nonsense charges on private mileage. I want to keep the VAT records as simple as possible and this strikes me as the fairest method.
Looking at the notice it seems that your options are (taken directly from 700/64) :
(a) claim all of the VAT because 100% is used for business purpose
(b) claim all VAT charged and apply the fuel scale charge
You can claim all the VAT on road fuel if your business funds:
fuel bought for business motoring only or
both business and private motoring as long as you apply the appropriate fuel scale charge
(c) use detailed mileage records to separate your business mileage from private mileage
If your business funds both business and private motoring and you wish to recover some of the VAT, but do not want to apply the fuel scale charge you must keep detailed mileage records.
You state in your question "for the business mileage element" implying that some of it is not, therefore option (a) above would not be available to you.
Also note that applying fuel scale charges does not mean that detailed mileage records need not be kept. These must be maintained in all instances.
This note is intended to point you in direction, not as advice. The above should be read in conjunction with 700/64 not instead of. Anything in 700/64 that disagree's with anything that I have written of course takes precedence.
Hope that this helps,
Shaun.
-- Edited by Shamus on Tuesday 17th of May 2011 09:13:10 AM
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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.
Shaun I really appreciate your most helpful response. Thankyou so much for your kind and professional assistance. I re-confirm that there is a private mileage element (as I'm sure there is in all chauffeur/taxi businesses) hence it comes down to the two VAT options available. Armed with your advice I shall therefore plough ahead with confidence using the method solely based on mileage records, which i consider the simplest and fairest by far. Fuel scale charges seem illogical to me and I cannot see why they allow it as it seems to go against the grain of everything else in VAT regarding private use. Can anyone make a case then for the logic of Fuel Scale charges really when it can cover someone with 1% private use or 99% private use?
scale charges are one of those cunundrums in the tax system right up there with if you are a director of a VAT registered limited company regardless of company turnover directors can claim mileage at the government rates (45p/25p) but if you are a sole trader who breaches the VAT threshold (used only for reference purposes in this instance) then on change of vehicle following the breach mileage rates cease to be an option for you.
For more information related to the above have a read of the bottom half of page 3 of helpsheet 222 for the self employed. Here's a link :
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.
Hello Shaun, Yes but it's these bloody connundrums that do my head in, and our friends at the VAT are so nice and helpful operating this wonderful simple logical system aren't they!!!!!!!!!!!!! They should have a book of worked examples to refer to methinks on such things as my query rather than their often unfathomable speel, but they daren't because it's just all so complicated and scares them, and a pound to a penny they would undoubtedly make errors to boot in these worked examples................... or am I just being cynical.
