Does new rules on input VAT on business fuel applies to sole traders too?

Does new rules on input VAT on business fuel...

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As a result of the HMRC way to sidestep the recent European Court judgment, Vat receipts must be provided to substantiate claims for employee business mileage.

Does the same apply to sole traders or partnerships when owners of the business (not the employees) use their own private cars for business?

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james

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By stevec.cooperparry.com
08th Feb 2006 20:03

Input VAT not business mileage
The change is such that VAT receipts are only required in order to claim back input VAT on fuel used for business, not to substantiate employee business mileage.

Self employed taxpayers (sole traders and partners) can only use the authorised mileage rates if the business turnover is below the VAT registration threshold - see http://www.hmrc.gov.uk/manuals/bimmanual/BIM47701.htm

So if the business turnover is below the reg limit it is unlikely that they are VAT registered and hence they can't claim back input VAT anyway (unless your clients is voluntarily VAT registered?).

Steve Coates
Tax blogger

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