my grip on reality i being threatened and I'm up for opening a discussion.
consider this if you will.
A company can reclaim the VAT on petrol at standard mileage rates, so say 14p of the 45p is allowable to claim VAT against.
All good, not rocking any boats there.
The VAT is legitimately claimed against receipts.
Now ponder that a car repair is performed on a car where mileage is claimed because it is used for business. That also produces valid VAT related to the car.
I was reading this discussion on Aweb : https://www.accountingweb.co.uk/any-answers/vat-reclaim-on-maintenance-of-business-use-private-car
And I find myself thinking that VAT beyond standard mileage may be claimable on necessary repairs not only on the petrol.
At the ver least I'm seeing the VAT on the repairs as counting towards the allowable VAT where there is a shortfall in the receipts
As I say, that conversation has rocked my world a little and interested to read others input
Read espechially Steve Kesby's response at the end. Makes for some interesting reading. Thankfully however is pans out it doesn't annul any advice that I've given previously but just interested how others view this.
So one thought on this is that (say) 14p of the 45p relates to petrol and VAT is reclaimable on that.
therefore 31p of the mileage allowance relates to other elements including maintenance and repairs so why should VAT not be reclaimable where legitimate repairs have been carried out of a car provided that such does not breach the boundaries of the 31p.
Discuss...
all the best,
Shaun.
Just to say. Thais is a discussion, not advice. Anyone reading this who is not a bookkeeper or accountant should talk to their representation rather than acting upon anything you read in professional discussions here.
-- Edited by Shamus on Tuesday 12th of November 2019 07:51:13 PM
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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.
Oooo a technical debate on BKN. I could say what I really think about it, but will reserve judgement.
If only I had the time.
Some initial random thoughts (and they really are random):-
The 31p is to cover servicing, maintenance, repairs, MOTs, car insurance, car tax and depreciation. Some of these are exempt or outside the scope of VAT. How would you, to HMRC (tribunals) satisfaction split the cost to allow for the repair cost? (Am thinking the split for fuel has been decided so should there not be some form of cut off for the rest?)
Ive not read Steve's HMRC links (sorry time factor) - do they still stack up to his argument given the Aweb post was from 2014 and the info in them was updated in 2016
What does current law (VAT act/IOTA) state?
Where are we at with case law? One I picked up on was Marsh (Bolton) Limited and Others v HMRC (2017), although as Ive not read it other than the initial line, Im unclear if this was a use of employees cars or company cars so the ruling might not have any relevance, but may be a pointer for the non fuel element
I would have thought that if this was a goer a fair few folk on Aweb would be shouting about it, from 2014 to now. Ive not seen anything, but again, not a mass of time to research it.
Wonder if someone would take the establishment on to test it? With one director company what would be the VAT savings across 10k miles per annum - £750 tops. Guess it might be worth it for bigger company. Wonder if anyone has tried it.
What is your view on who the invoices should be addressed to? Im sure Ive seen something on 'making good' not being allowable (case law? Cannot recall where)
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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
I've made a similar point before - and at the time, Shaun, I'm pretty sure you were one of the voices arguing I was wrong - but you've now struck upon the very issue I was highlighting. 8)
I've held the opinion for a long time that the 45p mileage and ability to reclaim the VAT on the fuel element, but no more, means there is potentially unclaimed VAT on any repairs that the balance covers, and that's unfair. (It's also unfair if the car's thirst is such that it's drinking a little more fuel than the rates specified by HMRC - but that's another matter).
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
I've made a similar point before - and at the time, Shaun, I'm pretty sure you were one of the voices arguing I was wrong - but you've now struck upon the very issue I was highlighting. 8) Anyone locating this post gets a gold star, Im finding it hard to locate stuff again what with the most recent changes to the website!
I've held the opinion for a long time that the 45p mileage and ability to reclaim the VAT on the fuel element, but no more, means there is potentially unclaimed VAT on any repairs that the balance covers, and that's unfair. (It's also unfair if the car's thirst is such that it's drinking a little more fuel than the rates specified by HMRC - but that's another matter). HMRC manuals state that you can use the advisory rates published by AA/RAC/other motoring association rather than their own. Im not sure if these are any different though.
-- Edited by Cheshire on Wednesday 13th of November 2019 03:56:06 PM
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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
Well you learn something new every day. I didn't realise that the self employed couldn't claim the mileage rate if they were over the advisory turnover. (I haven't checked but presumably this is still in line with the VAT threshold.) Fortunately non of my clients are above that threshold who claim mileage.
I've read the other thread, interesting reading, but I would have thought that a VAT claim for repairs would have to be in line with the personal/business mileage of the vehicle. As an example, a vehicle with 50% mileage would be eligible for 50% of the VAT on repairs. I've read the link Vince posted and that seems to be in line with what it says, although it isn't specific about the percentage, so I'm with Vince on his reasoning in his own case.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
