Two questions: Vat on Road Fuel/Qualifying Loan

George Registered Posts: 43 Regular contributor ⭐
Can anyone help, please?

1 Vat registered sole trader pays £10.00 on road fuel (£8.70 + vat). What expense figure is posted to motoring expenses in the P&L? (I might be confused over irrecoverable vat).

2 Person has taken out 'qualifying loan' (S.398 ITA 2007) as a capital injection into business partnership with another. The latter died last year. Is the first person still eligible to continue to claim tax relief as a deductible payment on the loan interest?

Thanks for your help!


  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 Dedicated contributor 🦉
    VAT on fuel

    Hi George

    The figure posted in the vehicle expenses is the net figure and the input VAT is debited to the VAT account.

    I'll leave it to someone else to answer part two. One thought though, if this was a two person partnership and one now deceased, the partnership has also ceased and this might affect the loan/interest in some way.

    Hope this helps.
  • George
    George Registered Posts: 43 Regular contributor ⭐
    Sorry. I didn't make the first question clear. No input vat is being claimed on road fuel - it is more cost effective, in this particular case, not to apply the scale charge. So is it still the net figure that is posted to motor expenses?

  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    No, if you are not claiming the input VAT back then post the gross figure.

    With regard to your second question, why was the loan interest not claimed as a trading deduction in the accounts of the partnership?
  • George
    George Registered Posts: 43 Regular contributor ⭐
    Dean, thank you for your help. You've got me on that one. I can't give you an answer, but I can't see why it shouldn't be treated in the way you suggest. The interest has been claimed by the previous accountant as a qualifying loan, and the job has now landed in my hands. The interest figure has been entered on the tax return separately.

    Anyway, I am grateful to you for your insight and any further advice you may offer.

    Thank you.
  • Julia Crouch
    Julia Crouch Registered Posts: 68 Regular contributor ⭐
    Hi George

    If you are making an adjustment to the fuel charge and claiming mileage instead you could still claim some input VAT on the mileage part of the 25p/40p allowance.

    HMRC Reference:Notice 700/64 (May 2007) will help.

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