Hi everyone. My head is about to explode with this issue and I have asked an Accountant but I'm still not 100% clear on this issue so I was wondering if someone on this forum may be able to help?
A new client of ours owns 2 "Pool" Cars and then 2 Company cars. The drivers of the Pool cars expense Fuel Receipts and the drivers of the company cars expense Mileage. So far that is all fine and correct I'm cool with this. Where the confusion begins is.........How is the VAT handled for these?
Pool cars - Apparently for the past 6 years he has been claiming VAT on the Fuel Receipts (that were paid by the employee not the company) and I didn't think you could do this? I would have thought he could only reclaim the VAT if the company paid for the fuel ie a fuel card? or company debit card? I didn't think you could claim VAT if an employee paid for the fuel?
Company car - This is my understanding, he can apply the "Fuel Element" but would require fuel receipts on the business mileage that is claimed (by the employee). He only pays 20p per mile to the employee and the current Fuel Element is 15p for their cars. So my questions is, regardless of the amount he pays the employee for mileage he can still claim the full 15p for the fuel element?
I hope I have explained this clearly but as I'm confused with it all, it is possible I didn't.
Yes, you can reclaim VAT on the pool car fuel receipts, even if the fuel is bought by employees and reclaimed, but.....if there is any private use of the fuel (and I bet there is!) VAT fuel scale charges must be paid over on the VAT return.
Re the company cars, your understanding is correct, yes. Remember, the fuel receipts must be dated before the journeys in question.
I take it that the company owns all of the vehicles.
With regards to the VAT on fuel, you have four options:- 1. Claim all the VAT back on the fuel because it was used 100% for business; 2. Claim all the VAT back and apply a fuel scale charge with respect to private motoring; 3. Use detailed mileage records to separate private from business motoring. You would then only claim the Input VAT on the proportion of business motoring to total motoring; 4. You do not claim the Input VAT at all. This would occur because in the second scenario, the scale charge is greater than any Input VAT that can be claimed.
