VAT Scale Charges

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aliwal
aliwal Registered Posts: 3 New contributor 🐸
in General accounting discussion
Anyone had problems with VAT fuel scale charges. I have a client who has 3 vans all business use - no problem - no scale charge. The client also has a car which has some business use. No vat is claimed on the fuel for this vehicle so no scale charge added. The problem is that HMRC suggest that because the business funds some business miles for the car and because no scale charge is added back then ALL vat on fuel even for the vans should be disallowed. Help!:

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  • PAMDILL
    PAMDILL Registered Posts: 721 Epic contributor 🐘
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    I have had several VAT inspections where business mileage allowance had been paid on private cars but no petrol supplied. VAT Inspector checked fuel invoices, cash book etc. and was perfectly happy with the state of affairs. No problem about VAT on van fuel then not being accepted.

    I have had some real jobsworth inspectors and that is the one item that has never been an issue.
  • aliwal
    aliwal Registered Posts: 3 New contributor 🐸
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    Vat Scale Charge

    Thanks Pamdill. In this case some fuel invoices went through the records which covered business miles. No vat was claimed on these. I am being quoted the following which I think comes from a VAT booklet....... HMRC allow by concession only for the business user not to apply the scale charge on condition...that you do not claim any input tax on any road fuel bought by the business. This applies to ALL road fuel bought by the business whether it is used in cars or commercial vehicles

    Was the charge a fixed cost per mile in your case?
  • NeilH
    NeilH Registered Posts: 553 Epic contributor 🐘
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    aliwal wrote: »
    Thanks Pamdill. In this case some fuel invoices went through the records which covered business miles. No vat was claimed on these. I am being quoted the following which I think comes from a VAT booklet....... HMRC allow by concession only for the business user not to apply the scale charge on condition...that you do not claim any input tax on any road fuel bought by the business. This applies to ALL road fuel bought by the business whether it is used in cars or commercial vehicles

    Hi

    From my point of view (and I could be wrong, it has been known!) the scale charges aren't an issue you for you and therefore the above would not apply. Sounds like an HMRC member of staff who isn't as clued up as they should be...

    However, having read the above after posting it I did wonder how the car fuel is paid for... Is it on invoice/fuel card or does the driver claim on expenses for business mileage?

    Neil
  • aliwal
    aliwal Registered Posts: 3 New contributor 🐸
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    Car fuel is paid for by cash
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Either claim all fuel bought for the vehicle and claim scale charge
    OR
    claim 40ppm and claim the fuel element inclusive of VAT.

    AFAIK each vehicle can have a different treatment.

    TBH I'm not surprised they have disallowed it. You can't just claim 'only the fuel for business journeys' as it's not easy to quantify - how full was the tank at the beginning of the journey? Was there any fuel left at the end? Was there a private use trip in the middle?

    If the car is used primarily privately, then 40ppm is usually far more generous anyway.
  • qwerty
    qwerty Registered Posts: 82 Regular contributor ⭐
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    Have you had a look at VAT Notice 700/64: Motoring expenses?

    This is the booklet the inspector is taking his quote from (paragraph 8.5).

    Note that his quote is taken from the paragraph relating to not claiming any input VAT. Your situation is more paragraphs 8.3 and 8.4 - you have a mix of business and private mileage and therefore you can claim the proportion of input VAT which relates to business use and not pay a scale charge.

    Do you have mileage records for the car which show a breakdown of the business/private miles done?

    In actual fact, you may have under claimed VAT by not claiming the input VAT on fuel relating to the business use of the car (the Notice says you can do this and not pay the scale charge as you would only be claiming VAT relating to business use).

    Now, suppose that the car had no business use, your treatment would be correct under paragraphs 8.3 and 8.4 as:
    100% of inputs re van is business (therefore claim all input VAT)
    0% of inputs re car is business (therefore claim no VAT)

    Having correctly apportioned the input VAT to exclude any claim for private use of fuel, no fuel scale charge would apply. While the Notice does say that mileage records should be used to calculate the percentage of business/private use, I believe you would have a good argument for using the above method which accurately shows the costs/input VAT relating to business/private use. As you would be following the rules set out by HMRC in paragraphs 8.3 and 8.4, paragraph 8.5 would not apply, therefore the inpector's quote will also not apply!

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