Fuel paid for by company on directors personal car

Fuel paid for by company on directors personal car

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Hi guys,

Hoping for some help / clarification on this.

I have a client that is a limited company and when doing their books i've noticed that the sole director of the company has been paying for fuel from the company bank account. The car is owned by the director personally and he uses it "mostly" for business purposes.

How would I account for this when doing the final accounts and company tax return?

 

Many thanks,

Jack

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By DMGbus
09th Dec 2016 13:23

Here is how I would deal with this:

1. Debit directors loan account with fuel costs paid for by company (don't reclaim VAT on the fuel **)

2. Credit the directors loan account with 45p per mile for recorded business mileage using personally owned car [25p for miles over 10,000, 45p first 10,000]

3. Reclaim VAT on fuel element of recorded business mileage providing that VAT receipts retained **

Above to be done with approval of director.

** Assuming VAT registered

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Replying to DMGbus:
RLI
By lionofludesch
09th Dec 2016 14:57

Spot on.

If the director's kept no records of his business mileage - tough.

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By Manchester_man
09th Dec 2016 13:32

That is what I would do also.

The alternative, or course, is to submit a P11D and pay the BIK.

I have one client who has the company pay for all fuel for his car. For this client, we drew up a policy stating that ALL private fuel must be reimbursed to the company. Client therefore records private only mileage and reimburses the company.

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By JBOWDEN88
09th Dec 2016 13:45

Thanks for the help both of you!
Very much appreciated.

Jack

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By johngroganjga
09th Dec 2016 13:46

I agree with the above.

But to answer your questi0n - in the accounts its motor expenses, insofar as you do not decide to post it to the DLA.

In the company tax return it's nothing - you don't need to add it back.

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