One of my clients has a Mitsubishi double cab pick up which is on (lease hire?) via a previous business which I understood to be as a sole trader. My client initially stated that he would be happy to get the invoices changed to his new limited company business but the firm he leases it from would have an issue with this. Ive just found out that the previous business could have been a limited company which is now dissolved.
He has given me some of the monthly bills to put through his new limited company business and pays for all fuel though the business account and Ive had a running battle about fuel v mileage/being unable to claim it all given there is a personal element to it. So - Ive been putting it all through to his DLA until he could speak to an Accountant to clarify matters and to make sure by doing this he doesnt incur any additional personal tax etc. He didnt have an Accountant so I introduced him to someone who unfortunately is off sick for 6 weeks (genuine - suddenly got taken in hospital with two days notice for an op!). I spoke to the Accountant's boss - he advised me to continue doing what I was doing and wait until the year end (trading since April, but year end December so not far off), at which point they would assess the vehicle and mileage and adjust as necessary. Ive told my client and he was happy with that.
However - now, because he has a larger than expected VAT bill he is running around to locate 100+ missing invoices (which Ive been on at him for months to do) and wants to put all of the VAT on his fuel through, as it does run to a few hundred pounds.
My question (eventually - sorry) - am I able to put through the full VAT on fuel for such a vehicle, should I take a percentage off the VAT reclaim for personal use, can I only claim the VAT fuel scale charge, or should I stick to my guns and say he needs to speak to the Accountant? Would there be an impact on his personal tax position if he did put all the fuel through?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
hi Jo. I've never liked apportioning a motor VAT fuel claim if they don't have a good mileage record noting the longer journeys made and a weekly split of private and business miles.
That seems to leave you with claiming all the VAT and adding back the relevant Fuel scale charge. If the scale charge is more than the VAT on fuel in period, then disclaim all the VAT and don't add the scale charge. The latter will slightly bring down his profits for CT.
Not exactly the answer your client wants but he looks to be asking the state to contribute to private petrol bill. Whats the % split between business and private ?
Hi Tim
Ive had the age old argument about registered office being his home address but his obvious place of business is several miles away! When I try to discuss % split between private and business he just tells me 100% despite the above and never mind anything else he might do personally. Im pretty sure he has no other vehicle. Ive suggested he keeps mileage records (several times) but to no avail. Hence why I thought I would get the Accountant to sing from the same hymn sheet as me!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi Tim Ive had the age old argument about registered office being his home address but his obvious place of business is several miles away! When I try to discuss % split between private and business he just tells me 100% despite the above and never mind anything else he might do personally. Im pretty sure he has no other vehicle. Ive suggested he keeps mileage records (several times) but to no avail. Hence why I thought I would get the Accountant to sing from the same hymn sheet as me!
So he wants to claim motoring from home to employment? I feel your pain but change the argument to 'let me have the contemporaneous record'.
Supply him with a daily mileage sheet as he should write down all spurious claims each day anyway if he thinks they're allowable. Print this at the top of it:- http://www.hmrc.gov.uk/manuals/eimanual/eim32356.htm
My bet is he won't record them nor the shopping, holidays or football match. No record, no claim. If he does make a record each day you can only apply the legislation to each journey.
PS. If he does it for a week then whilst cautioning the client in writing, I'd be willing, as a one-off, applying the % split to the previous VAT Return.
What a great plan! I reckon he will not have time to fill it in given he hasnt had time to get me the missing bits of paperwork!! I will try that now, thanks Tim
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
If he's then a good lad and carries on for 13 weeks then you can compare a longer term private / business % to the one you applied under caution and amend if it was 'miles out'.
In any event, I don't think you are allowed to "take a percentage off the VAT claim for personal use". If there is any personal use then you either claim VAT based on the mileage records (he has to produce VAT receipts for his fuel for you to be able to do this and the VAT on those receipts must be equal to or greater than the amount of VAT being claimed on the mileage); not claim any input VAT or claim all the input VAT and apply the scale charge.
-- Edited by Dinky on Tuesday 2nd of December 2014 01:20:19 PM
I must say, the same thought was in my mind Dinky but, as you go on to say, claiming a business proportion is a legitimate method and we have to suppose that he finds the receipts.
What we're faced with is an acknowledged absence of mileage records, but an attempt to claim a fair amount and face the music later if challenged during a VAT Visit.
It is certainly a risk that a VAT Officer would penalise but Jo. has not done this before and the plan is for her not to need to do it again. Providing the client goes on to keep a daily mileage record which tallies with future way she prepares his VAT Return then it might be a risk the client is willing to undertake.
Hi guys
The one thing I do have for his fuel, well mostly, are his fuel receipts. Sorry I've obviously confused matters with that bit of info. The missing 100 + bits are, believe or not,mostly bog standard invoices, I've managed to get about 60 from various suppliers myself today, but the remaining ones he needs to find, chase or give me their contact details to get copies. Tbh, the easiest way would be for the latter cos he will never do it as he is so disorganised. So I've still got to tackle the fuel issue.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi again
The plot thickens. He has been told that if he has the vehicle liveried then he can claim ALL the VAt on fuel and can ignoret he personal v business mileage issue, which then surely becomes a benefit in kind issue for any personal mileage so surely he still needs to keep a log?
So - can I claim all the VAT back in this scenario? Do I have to still apply the fuel scale charge rules? Also - its a case of stuck on magnets with the store branding on them - whats the position?
Sorry but now Im confusing myself!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
He has been told that if he has the vehicle liveried then he can claim ALL the VAt on fuel and can ignoret he personal v business mileage issue,
Where is the record of 100% business mileage? Where is the vehicle kept at night and why? Yesterday he was saying travel from home to work is allowable so it might be difficult for him to obtain such a record.
which then surely becomes a benefit in kind issue for any personal mileage so surely he still needs to keep a log?
He's coming up with anything to avoid incriminating himself by keeping a record. Mileage treatment for B.I.K. has an effect on VAT but not the other way round.
So - can I claim all the VAT back in this scenario? Do I have to still apply the fuel scale charge rules?
Yes, you can claim it all back and apply the fuel scale charge as in b. above.
Also - its a case of stuck on magnets with the store branding on them - whats the position?
Sorry but now Im confusing myself!
As a matter of interest, what does the company do and when is the VAT Return due?
Hi Tim
The business is a kitchen suppliers and he has been advised by the regional manager of a franchise who I know knows nothing about it and is giving him duff info. Ive told him in no uncertain terms to sort out a mileage log, give me his CO2 emissions info, that if he tried to claim 100% business mileage when there is clearly private mileage in there that this could cause a problem from the tax man, especially in the light of an inspection. (His vehicle is kept at home and he clearly does personal mileage in it). Ive told him to speak to the Accountant and get a view from him on how what he wants to do will impact his company and him personally and to get something in writing from his accountant. Failing that Ive said to email me with what he wants me to do at which point I can go back and counter his argument (if needs be) and if he still wants me to go ahead then he has to accept in writing its completely his liability and that he is going against any advice. He was initially prepared to wait until his meeting with the Accountant in the new year but then saw his VAT bill and as cash is tight he is thinking that a straight forward calculation of VAT on £100+ per week of fuel could reduce his VAT bill. His VAT is for the October quarter end and so is due on 7th December. (Im out all day tomorrow and still doing a hunt for all the other blinkin receipts and invoices he is missing, some of which are from the franchisor and could save him cash by reducing his VAT bill if he spent more time doing that!)
Sorry Tim - Im at my wits end because Ive never done the above (everyone I know claims mileage at 45p) and Im working 18 hour days for other clients at the mo and can hardly see with eye strain, nor concentrate on taking on board new info because Im that tired! I just want to scream, or find 5 minutes to sit and read the info, but the earliest I can do that will be Friday! Or maybe I will not eat tonight and do it then! But THANK you for bearing with me!!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Tell him how much adding the relevant Fuel Scale Charge will cost in additional VAT. With a bit of luck it might be fairly insignificant in comparison to this big VAT bill.
Jo just think of it like this. When you're doing 20 hour days, you'll know which client to get rid of :)
Im going to tell him that it will cost more in my fees than he will save in VAT!! Never mind the fact he needs to pay me my existing bill before I do any more for him and that includes finishing the impending VAT return. He will be a gonna if he gives me any more rubbish! Chin just starting to come up cos Ive run out of time for my next deadline cos I need sleep, food and a few flippin bottles of wine at this rate. Thanks the Don.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
