Can anyone please advise. I work for a LLP company, and at the moment the staff and the proprietors use their own cars for travelling to various exhibitions and shows, and give in their petrol receipts and the company reimburse them through petty cash. The expense is then recorded in sage as petrol expenses, and the vat is being reclaimed on all petrol expenses. I'm a little concerned about this, . I think they should be recording their business mileage and then claiming the going mileage allowance, and then vat should be reclaimed on this amount only.I was hoping someone could clarify the correct way to deal with these expenses, and also advise how I should approach the company and tell them I think they need to change the way staff are reimbursed.
If you are claiming VAT on fuel receipts you really should be putting through a scale charge for each car. This is usually not cost effective as the scale charge will almost certainly cancel out any VAT on fuel. I always recommend that a mileage charge is claimed (currently 45p per mile for the 1st 10k miles in a year). VAT can be claimed on the fuel element and if HMRC recommended fuel rates are used and a valid VAT receipt is attached for sufficient fuel to cover the miles claimed, there will be no comeback. Detailed mileage records are also required.
