Fuel scale charge

System

Can any kind person shed any light, please?

What is the double entry in the accounts here?

Scale charge - £260.00
Vat due - £ 38.72
Net amount - £221.28

Thanks.
Simon

System

Re:Fuel scale charge

Hi Simon

CR Output VAT control £38.72
DR Scale charges (overhead) £38.72

On the VAT return £38.72 goes in box 1 and £221.28 in box 6.

If you are using bookkeeping software you might be able to use the wizards or tax codes which will automatically include the figures in the right boxes on the VAT return.
eg in Sage, post the journal

CR £38.72 code T1 to Output VAT control
DR £260.00 code T9 to scale charges
CR £221.28 code T1 to scale charges

Sheelagh

System

Re:Fuel scale charge

Thank you, Sheelagh, you're a star!

You're definitely more expert at this than me. Can you advise me a little further, please? I have previously seen the gross amount (£260) added to box 6 of the Vat return. By what you say this must be incorrect. Can you confirm this, please?

I use VT Transaction - I'll check whether the entries fit naturally into the software's Vat return.

Is the £38.72 DR figure a final P&L a/c expense figure - I have also seen this put into 'drawings'.

Thank you again for your advice, and for all the other valuable contributions you make to this forum.

Simon

System

Re:Fuel scale charge

Hi Simon
I haven't done fuel scale charge for a year or so, but this is how I remember it.
What you are actually recording, form the HMRC point of view, is a supply of fuel to an employee / director.
If you apply that concept in the same way you do other sales, then the net cost or value of the supply should go in box 6.
Fuel scale charge is designed to record fuel paid for by the business and used by the employee / director. Therefore it is a cost incurred by the business for the benefit of the empoyee and should be debited to an overhead account.
I've only ever used fuel scale charge for Ltd companies.
Now you've mentioned drawings my head is in a whirl. Can anyone else tell us how this fits with the self employed business owner? I think it makes sense to debit drawings for a sole trader because it shows that the business owner has received that "income" as oposed to it being shown as an allowable business expense. - I'm not sure -

Sheelagh

System

Re:Fuel scale charge

I've never seen scale charges being debited to drawings but Sheelagh's interpretation of the reasons why they would be posted to drawings seems feasible.

We always post scale charges to motor expenses in the P&L.

Best regards
Steve

System

Re:Fuel scale charge

Thank you again, Sheelagh, and Steve.

Steve, I wonder if you would mind showing your opinion of the accounts debited and credited, as Sheelagh has done above.

Thanks ever so much for your advice.
Simon

System

Re:Fuel scale charge

Hi Simon,

Assuming you use Sage:

Credit Sales Tax control £38.72 (use T1 as tax code so the system picks it up in the return).

Debit Scale Charges (I think acc. 7350) in the profit and loss.

Kind regards
Steve

Edit; just realised you don't use Sage but the entries will be the same in VT.

System

Re:Fuel scale charge

Thanks, Steve for your help.

I know it's me, but this is beginning to drive me nuts! Where do your 'motor expenses in the P&L' fit in?

Thanks for your patience!
Simon

System

Re:Fuel scale charge

Hi Simon,

Scale charges are a business expense relating to fuel supplied to employees/directors so the debit would just be sent to motor expenses. In Sage there is a separate code for scale charges but I don't think there is one in VT. So just post the debit side to motor expenses.

Kind regards
Steve

System

Re:Fuel scale charge

Steve, you're a gentleman.

Thank you.
Simon