How do I account / record for fuel in these circumstances.
1.Two private cars used in business, the business paying 15p per mile advisory rate. The mileage is logged to match/justify the fuel payments which are paid through the company bank account at least twice per week.
2. How do I record the amounts in the accounts/vat return? Individually per fuel payment with expense/vat/bank or just as monthly gross receipts - expense/bank ignoring the vat.
3. I then claim back the vat element at 2p of the total miles logged using the fuel advisory rates. Do I just work out a manual entry to include in my inputs on the vat return.
4. Do I need to account for any output vat as well as input vat on the vat return or is this just for a company car.
Replies (4)
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Paying Mileage Rate
recording payments and claiming VAT - there are a number of options!
You could create a journal or invoice for each payment, for each week, or for each month - depends on which is more convenient. The key is that you provide the original data to justify the entry.
There is no need to account for output tax too - see http://www.hmrc.gov.uk/briefs/vat/brief1112.htm
hope that is clear
What are you doing?
Are you paying for the fuel through the company (and reclaiming VAT), and then charging the drivers for private fuel used, or are you paying drivers fuel rates for business use?
Your mention of output VAT implies that the company is receiving fuel payments from the private car owners, rather than making them to the private car owners. I am maybe reading your post wrong, but it isn't clear to me.
You cannot reclaim VAT on the fuel bought. You can only reclaim VAT on the mileage payments made for business use.
The drivers should be buying their own fuel, and you pay them the agreed rate per mile, and you can then reclaim VAT on the fuel element of the mileage payments.
You can't pick and mix, ie. pay for all the fuel, and then charge the drivers for the part that isn't business mileage. How will they work out what mileage rate you have paid them, so that they can claim the full 45p tax relief?