Ok, I'm struggling here. Could anyone tell me the correct way to do the bookkeeping for mileage allowance paid to a director or employee of a Limited VAT registered company?
I have a client who used to send his list of mileage to the previous bookkeeper and she would add it on as a motor expense and he would physically pay himself from the bank.
Dr. motor expenses, Cr. bank.
Nothing went through payroll and no VAT was reclaimed.
Am I right in thinking that both these need to happen??
What is the procedure for this, is it - notify his payroll service to inform them he uses X many miles per month and then receive payment through his salary?
What is the bookkeeping element that I need to do in regards to the VAT? Surely I can't add VAT onto payroll journals.. and if I continued with the motor expense as previously done then aren't I doubling up?
A final question - he is on Sage and I have noted a Scale charge icon on the VAT return tab, should I use this rather than putting it all through payroll and bookkeeping??
I'm ever so confused and would appreciate a 'dummies guide' if anyone has a moment to spare!
Hi
Into reqd before we start. We always ask newbies!
Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, are you a bookkeeper or accountant, what qualifications, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers.
Please add your first name, rather than just initials so that appears on your posts each time (profile, signature)
Is it a Director or an employee?
Is the director also a participator?
What type and version of sage?
Does the list show a full breakdown of where he has travelled? Is there any commute mileage? (Care)
What is the mileage rate being paid?
Daft question, but I have to ask as folk get confused, is this definately a Limited company, or sole trader?
What other vehicle expenses are being put through?
Do you have fuel receipts as well?
__________________
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
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.
firstly i would consider how you actually pay for mileage? so am unsure how the double entry has been arrived at Dr M/Exp Cr Bank, yes you pay for fuel as it is an actual cash transaction you cant physically pay cash for mileage therefore it is recorded as a transaction for the Directors Loan Account only recording the expense
Dr M/Exp Cr DLA
based on their being a sufficient mileage log in place for the miles travelled during the associated period
firstly i would consider how you actually pay for mileage? so am unsure how the double entry has been arrived at Dr M/Exp Cr Bank, yes you pay for fuel as it is an actual cash transaction you cant physically pay cash for mileage therefore it is recorded as a transaction for the Directors Loan Account only recording the expense
Dr M/Exp Cr DLA
based on their being a sufficient mileage log in place for the miles travelled during the associated period
Hi Rob
Just a couple of hints on this ol forum.
If someone cannot be bothered responding to a request for an intro or to answer any questions the regulars have, we tend not to bother answering them. Quite often as they are not in the profession.
This one has been on as recently as May but decided not to answer. Shame really!
It would be perfectly valid to pay the mileage rate as cash and therefore have Cr bank if the Director (who we dont know is a participator or not as we didnt have that info) or indeed the employee was paid such an expense direct from the business bank to their personal bank account. This does happen in some industries. Obviously what is not allowed is to run the mileage and fuel re-imbursement schemes together for the same employee.
__________________
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
