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Fuel/Mileage

Emma1708Emma1708 Well-KnownRegistered Posts: 217
I am about to start doing the accounts for a friend of mine who runs a childrens nursery. She is a sole trader. She has always put her fuel receipts in as an expense and not recorded/claimed a mileage allowance. Her accountant has always done her tax return on this basis.

Is this wrong? I thought she should be recording her business miles and claiming an allowance back or am I missing something?


Thanks

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Emma1708 wrote: »
    I am about to start doing the accounts for a friend of mine who runs a childrens nursery. She is a sole trader. She has always put her fuel receipts in as an expense and not recorded/claimed a mileage allowance. Her accountant has always done her tax return on this basis.

    Is this wrong? I thought she should be recording her business miles and claiming an allowance back or am I missing something?


    Thanks

    On the information given, yes it's wrong, if it's just fuel receipts.

    Either she claims 40p/25p per mile OR she can claim the whole running expenses of the car (fuel, maintenance, insurance, capital allowances) less any private use percentage. You have to choose which basis you want to use and have to stick with this basis until you change the car.

    If the fuel claimed is in the right ball park, then I presume that's why the accountant has let it through. Strictly speaking it's not correct. If he didn't make her aware of it, he should have done, imo.
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    Maybe he has disallowed the private use percentage????
  • Emma1708Emma1708 Well-Known Registered Posts: 217
    Thank you for the replies. She puts through all the costs for the car - maintenance, insurance and the HP until it was paid off.
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    If she's put through all costs then that's fine, if it was just fuel then she's likely been missing out but that's not the case. When you get professional clearance, ask for the private use percentage that's been applied and check with the client that this is still appropriate (it can change year on year).

    You can't now switch to 40p/25p a mile til she changes her car.
  • jiltjilt Font Of All Knowledge Registered Posts: 2,903
    Just a quick question, if she runs a nursery what business mileage does she do? Does she run the kids about?
  • Gem7321Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    I was asking myself the same question Jill!
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    I would guess it's more administrative mileage (driving to get materials etc).

    In this case, I would guess the private use % is high. In this case, I would have thought 40p a mile would be more beneficial so when she changes cars its well worth running both in year 1 and making an informed decision.
  • Emma1708Emma1708 Well-Known Registered Posts: 217
    Thank you for the replies

    She doesnt drive the kids about - thats what I have always found strange that the full vehicle costs have gone through.

    I suspect her accountant has not done any private % but cant be certain until I get all the information


    Is there a letter I need to send him to get him to release all of the information to me?


    Thank you
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Some accountants will put on the accounts whatever info the client has supplied. It's only in the tax computation that they will make some adjustments.

    Emma you're after a professional clearance letter.
    You want wording something like this:
    Dear xxxx

    We have been asked by xxxx to act as their accountant and we would be grateful if you could inform us if there is any professional or other reason preventing us from doing so.

    If not, would you be so kind as to forward us copies of their last accounts, tax returns, and the balances brought forward, along with any other pertinent information.

    Many thanks for your time

    Kind regards
    ....

    You can go into more detail as to what you want (so specify capital allowances, tax adjustments, breakdown of accruals, prepayments, other creditors and debtors etc) but I usually find the above will trigger enough information.
  • Emma1708Emma1708 Well-Known Registered Posts: 217
    Thank you for that. It is very useful
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