I need to recovery VAT on employee mileage claims. They claim either 45p or 25p (depending on miles). Im aware I can reclaim VAT based on the engine size and fuel type but the advisory rates on HMRC website state "these rates only apply to employees using a company car". I cant see any advisory rates for employees using their own vehicle. Should I use the HMRC rates or does anyone know where I can find the correct rates
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I think you're confusing VAT and Mileage allowance for staff
If you are VAT registered, the VAT on applicable purchases can be claimed and managed on your VAT return. the 45p/25p is an allowance for business mileage travelled by an employee against their income tax
Yes. Use the company car advisory rates for identifying (implicitly) what the fuel element of the 45p payment is for the purposes of VAT recovery.
HMRC accept this. See http://www.hmrc.gov.uk/manuals/vitmanual/vit55400.htm
HMRC officers may check what rates employers have used to calculate claimable input tax on the fuel element of mileage allowances paid to their employees. Current rates as published by motoring associations such as AA or RAC are generally acceptable. HMRC will also accept HMRC’s own advisory rates which are published twice a year and can be found at Company Cars - advisory fuel rates.
Invoices for fuel claims
Don't forget you'll need VAT invoices from the employees to cover the amount of VAT claimed. Easily overlooked...
You can only claim vat on the fuel element - not the full 25p
http://www.hmrc.gov.uk/manuals/vitmanual/vit55400.htm#IDAAG4HH "Input tax is calculated by multiplying the fuel element of the mileage allowance".
You can use https://www.gov.uk/government/publications/advisory-fuel-rates for identifying the fuel element.
I reiterate birdman's comment - make sure you have VAT receipts. These should be dated on or before the date of the claimed expense.