Is there any problem claiming the cost of fuel and reclaiming the VAT element if that fuel is fully for the business but when the car isn't an asset of the business?
My understanding was that it would have to be an asset otherwise mileage should be claimed?
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So ...
... assuming that we're talking about a sole trader the question of whether or not the car is an "asset of the business" becomes rather academic.
VAT on fuel claimable as normal (but probably with a fuel scale charge, unless you can prove to HMRC's satisfaction that the business has paid for no private fuel).
As an aside, if he car is being treated as a "non-business" asset presumably no capital allowances or other running costs are being clamed - if not, why not?
So ...
... if he is incurring expenditure wholly and exclusively for the purpose of his sole trade, what makes you think that he would be unable to deduct that expenditure (and claim VAT where appropriate)?
The OP has contradicted him/herself several times in just a few short postings, and AWeb contributors can't be expected to advise on what is effectively a moving target!
Is business actually a limited company or a sole trade (or even an LLP or partnership)?
If a company, is the car paid for (i.e. owned) by the company or by the director?
Who is paying for the fuel in the first place?
It's the other way round
I think the OP has made clear that:
1. He is a director of the ltd co that owns the car.
2. The Ltd co presumably claims CAs on the cost of the car plus repairs insce etc
3. The ltd co does not pay for private fuel.
4. So, the director pays for his own private fuel
5. Apart from his directorship, he also trades as self-employed, and uses the company car for that purpose as well as for the company's purposes.
6. So, he is presumably taxed on the car as a BIK, but not on private use of fuel.
7. He wishes to claim for the fuel he uses in his self-employment.
I see no reason why he shouldn't claim for the fuel he uses in the course of his self-employment against his income from self-employment - and reclaim the vat on it.
But, he cannot claim mileage allowance as such against his self-employed income, because it is not his own car. Mileage allowance is supposed to recompense you for the wear and tear/repairs/insce etc that you have paid for personally; this person has not paid for all these things personally - the ltd co has and will have received the appropriate relief for them.
Mileage allowance
Interesting - makes one want to suggest something like the Advisory Fuel Rates for employees using company cars which excludes the depreciation etc. which the employee isn't suffering because it is not his/her car. Even more interesting could be the insurance position in the event of an accident while on self-employment business.
The situation seems to me to be a case in which there is a BIK on the director for the car but he can presumably keep a log of self employed mileage and charge a proportion of BIK based on proportion of mileage used in s/ employment over total mileage that the car does.
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VAT on fuel is OK provided he keeps a mileage log and only charges for the miles covered in the self employment
No
The situation seems to me to be a case in which there is a BIK on the director for the car but he can presumably keep a log of self employed mileage and charge a proportion of BIK based on proportion of mileage used in s/ employment over total mileage that the car does.
The BIK has nothing to do with his self-employment. He can claim a portion of the running costs, based on mileage allowance or actual, but the BIK amount does not enter into the calculation. Unless I've overlooked some provision to the contrary.
I agree with BKD.
I think Geoff you are assuming that the self employed business is charged a cost for the car equivalent to a portion of the BIK charge. I don't think this is possible as that would either create another s/e trade in car rental (with a connected party transaction) or income for the company which owns it. It doesn't make sense. The BIK charge is a tax charge for use of the car. It does not transfer any legal right to use/let/etc.
own car
Well, admittedly just a quick google to the gov.uk website, since I'm out of time, so HMRC rather than statutory legislation, but I'd be extremely surprised if this wasn't the case:-https://www.gov.uk/tax-relief-for-employees/business-mileage-fuel-costs
"Something like the Advisory Fuel Rates"?
Why not the AMP rate? As I asked above, where does it say that the 45p/25p rates cannot be used?
Susanna
Your link refers to tax relief for employees using their own vehicles for employment purposes. We're talking here about an individual using his employer's car for self-employment purposes. Apples and carrots.
@ BKD
I know - it was the only thing I could find in a hurry. I still think the principle is the same - though in reverse in this case. It can't be right to claim for the element of relief that is not designated for fuel when you haven't actually spent the money on those elements. I'll look for the right thing later