Recovery of vat on car mileage claims

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in General accounting discussion
I have been informed by a local firm of accountants business news letter, that it is possible to make claims for input vat based on assumed petrol costs included in the rate per mile depending on engine size. And you can go back three years if you haven't been claiming this. I have visited the HMCE website but gave up after chasing my tail. Has anyone else heard of this? and if so do you know what the assumed petrol costs/engine size calculations per mile are?

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  • System
    System Posts: 100,537 🤖 Admin 🤖
    Recovery of vat on car mileage claims

    We reclaim the value of 2p per mile. The value of the mileages travelled by company employees from business purposes is totalled then * 0.02. Bear in mind that this cannot be reclaimed if you also reclaim the VAT on fuel - this is only when mileage rates are used for reimbursement. If there is nothing on the HMCE website, maybe just drop a letter to your local office stating that you are intenting to reclaim at 2p per mile and obtain their written acknowledgement / agreement of this.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Recovery of vat on car mileage claims

    Yes we claim back the vat element. the fuel element of the mileage allowance is given in notice 700/64 paragraph 31 - i think. We use a fraction formula depending on the current rate of fuel.<BR><BR>eg. Engine capacity 1795.<BR>Miles 4367<BR>Cost of fuel 84p per litre.<BR>mileage allowance 40p per mile.<BR><BR>mileage x table pence per mile x vat fraction = 4367 x 12.675 x 7/47 = £82.44<BR><BR>I hope this is of some help.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Recovery of vat on car mileage claims

    There is no hard and fast rules for claiming the amount of VAT on mileage allowance. Inland Revenue have tried to streamline this function by issuing Advisory Fuel Rates for Company Cars at this link:<BR><BR><a target=new class=ftalternatingbarlinklarge href="http://www.inlandrevenue.gov.uk/cars/fuel_company_cars.htm">Advisory Fuel Rates for Company Cars</a><BR><BR>However, as you know IR and C&E are two different departments so C&E are not required to use these rates. You will ned to agree a rate with your local C&E office for future use. IR and C&E might merge soon so the method and amount of claim would change.<BR><BR>Hope this helps.<BR><BR>
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Recovery of vat on car mileage claims

    I have a small calculator created in Excel for this purpose if you need it. Just enter these amounts <BR>Mileage<BR>Cost/Ltr<BR>Mileage Allowance<BR><BR>and these results are calculated<BR>Allowance<BR>VAT<BR>Net<BR>
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Recovery of vat on car mileage claims

    I've just picked up on this thread, I pay mileage to teachers who have to travel between sites daily, so this would be really good to claim. Is it true that the claim can go back three years?<BR><BR>If anyone has a calculator formula which could be sent to me I'd be grateful.<BR><BR>Thanks in anticipation<BR>
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Recovery of vat on car mileage claims

    I, through using the AA's fuel cost calculator, looked at how much per mile petrol/derv cost. I then, by trial and error adjusted the VAT rate to calculate the VAT on just the petrol component of the HMRC's 40 per mile allowance. It works out at 5.76%. By then multiplying the 40 per mile with the fraction 5.76/105.76 you can calculate the VAT in the allowance you pay to employees.

    Regards,
    Ben
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Recovery of vat on car mileage claims

    Someone correct me if i'm wrong, but I do belive that since 1 jan 2006 you will be expected to have fuel receipts to back up any VAT reclaimed, however it's calculated.

    Jodie
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Recovery of vat on car mileage claims

    Yes, you do have to keep enough VAT receipts to show you have paid out (for fuel) the amount of VAT you are claiming as input VAT. There was something about this in the January newletter on TaxationWeb.
    If the fuel element of your 40p per mile is 12p, then you can claim 7/47ths of that 12p as input tax. That's about 1.79 pence per mile you have to keep VAT receipts for.
    This will vary with the fuel consumption and mileage of individuals, but for one client I worked out he needed to keep about one in five of his fuel receipts.

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