Reclaiming VAT on road fuel
Can anyone help please regarding accounting for road fuel paid by an employee for business travel? As I understand it, the company can treat this road fuel as input VAT providing that it re-imburses the employee in full either at full cost or via mileage allowance. If the company does this using a mileage allowance, then when accounting for the transaction in the profit & loss account would the VAT (which can be reclaimed) be shown against the mileage allowance expense? I am confused with this one because if I show the VAT then in one particular instance where I need to accrue the mileage allowance expenses, it's the net amount which is accrued (and subsequently reversed in the profit & loss) but it will be the gross amount actually paid to the employee in the following year. So profit and loss is "understated" in the current year with the hit being taken the year after. Is that normal accounting practice in this type of case?