How to account for VAT on fuel for vans

How to account for VAT on fuel for vans

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I'm getting totally confused in trying to find an answer to my question! If a business has a van and purchases fuel for this van I assume that all the input vat can be reclaimed. Normally if any of this fuel was for private use and related to a CAR, I accept that a scale charge would have to be applied, or restriction on recovery of input VAT on an apportionment basis would apply. But what is the situation for vans, as I thought that VAT scale charges only applied to cars (which excludes vans), and that regardless of whether there was any private use, input VAT on van fuel would be recoverable in full.
Jane Powell

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By User deleted
04th Oct 2007 10:26

different point- benefit in kind
I am also a bit confused but from a different point. If the company provides a car and pays for all the fuel ( business and private). I understand that input vat can be claimed and the approprite scale charge is applicable. However is it not more important to consider that the employee faces a car fuel benefit? and hence should it not be the case that private motoring payments should be avoided?

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By AnonymousUser
04th Oct 2007 17:00

no apportionment is required
how are you going to apportion the private mileage on a company van?
let's say there are 3 million company van users in the UK.
how many of those keep private mileage records?
or to put it another way:
are you going to explain to your client, who drives a company van, that he is going to have to keep a log of his business and/or private journeys?
I have never come across a case where the VATman wanted to restrict the VAT input claim on a company van.

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By AnonymousUser
03rd Oct 2007 18:44

you are correct
the fuel scale charge does not apply to vans. Neither does it apply to motorcycles and pool cars.
Therefore you should be OK on the VAT so I wouldn't worry too much.

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By theaardvark
05th Oct 2007 11:10

Must restrict for non-business use on all purchases.
Unlike fuel purchased for motor cars, there are no specific rules applicable to the purchase of fuel for commercial vehicles. It follows the normal rules for the purchase of any goods that are put to business and non-business use; i.e. if there is any non-business use you must either disallow some input VAT or account for an output VAT charge under the Lennartz approach.

The same problem arises with mobile phones issued to employees. If there is any private use, you should account for it either through restriction of input VAT or accounting for output VAT.

For fuel in vans, it may be possible to reach an agreement with HMRC to apply a scale charge. I have had some Clients who have done that in the past, but it tends to be unfavourable to the taxpayer.

In practise, most HMRC officers will accept a flat-rate apportionment based on a sample exercise. Say, monitor mileage for a month and then disallow a flat percentage on each VAT return.

Regards

Paul Taylor
Senior VAT Consultant
Dains

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By AnonymousUser
04th Oct 2007 11:17

benefit can be avoided
by employee reimbursing company for private fuel.

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By theaardvark
04th Oct 2007 12:57

No scale charge, but apportionment.
You are correct that there is no scale charge due for fuel used in Vans. However, if there is private use of the van then there MUST be either some restriction on the VAT claimed or a charge to output VAT to account for it. A restriction on the input VAT is the more normal method used.

Regards

Paul Taylor
Senior VAT Consultant
Dains

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By janecpowell
04th Oct 2007 14:17

Thanks for info Paul, but.....
how do you restrict the input VAT claim - I'm assuming that mileage records would need to be kept, but what if mileage records are not kept, what other methods can be used to restrict the input VAT claim.

Also, is it possible to avoid having to restrict the input VAT claim by simply applying the output scale charge normally applicable only to cars?

Finally, I'm sure that I haven't seen this point being raised by VATman at visits where the client has not been performing any adjustment for VAT (either input or output) on fuel used by vans where there is private use - hence my earlier confusion - I guess those clients must have been lucky (?)

Sorry, as a final point - what about 'insignificant private use' is this concept used at all in VAT (to avoid any adjustment for VAT) as it is for income tax purposes?

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By GRETTONPARTNERSHIP
08th Oct 2007 14:28

Theory and practice may be different!
I thought I knew the position regarding VAT and vans but recently had a rethink. Having read the appropriate reference book I came to the conclusion that the fuel scale charge did not apply but some adjustment for private use was necessary. In this I agree with the comment by Paul.

The next question was how should t he adjustment be made. I rang the VAT helpline. I was told they did not expect any adjustment. I asked for a reference number for my query and logged it in my records.

The following week one of my clients had a VAT visit and I put the question to the VAT officer. He confirmed that Customs do not press the point about an adjustment for the private use of vans. He muttered something about Customs having lost a case on this, but did not say which case.

So where does that leave us? A reference book saying make an adjustment, but Customs saying do not bother!

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By ecvej
08th Oct 2007 14:40

Ordinary commuting - private or business?
Assuming it is necessary to adjust for VAT on fuel for private use in company vans, does 'ordinary commuting' count as private or business use? It would seem logical that 'ordinary commuting' is private use, but does this mean that in the case of an employee who only uses his van for 'ordinary commuting' and business use, no benefit in kind will apply, but the employer will still need to adjust for VAT on fuel for private use (i.e. the 'ordinary commuting')?

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By spike418
30th Oct 2007 14:32

Scale charges
I have just been looking at this point and find that the HMRC Vat guidance states at para 19.13 that the scale charge system can be used!

When did this interpretation change?

Anyone know where to find CO2 figures for vans etc?

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By ngm1scot
23rd Oct 2012 08:44

VAT on van fuel

I know this is an old thread but I was interested as one of my clients has the situation where she charges her employees for fuel for private use in company vans.

I appreciate that there may have been legislation changes since the topic was opened 5 years ago but for the record, PN 700/64 

6.6 Is VAT due if an employee pays a charge for the private use?

If your employee pays a charge for the private use of the car or other vehicle, you must account for VAT on these charges.

 

When I spoke with HMRC they said that  there was no alternative treatment (ie restricting input tax) as the notice indicates that the VAT should be treated as output tax.

 

Just thought it would be useful to add this

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