I have recently acquired a new VAT registered client, who, for accounts purposes has been claiming motoring expenses based on HMRC Flat rate motoring rates. On the face of it didn`t seem to be a problem, but then I realised that I hadn`t actually acted for a business, with this combination, before, and my question is, therefore, di I simply account for VAT under normal rules, i.e. based on invoiced motoring expenses, and then for accounting purposes deduct `motoring related input VAT from the figure of motoring expenses, as calculated at mileage rates ?
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VAT on mileage
Are you refering to reclaiming VAT on mileage claims, i.e. the 45p per mile for the first 10,000 and 25p thereafter?
If so, VAT would be reclaimable on the fuel element of the mileage claim, provided valid VAT receipts are submitted with each mileage claim made. The VAT reclaim would then presumably be posted against whichever account you posted the mileage claim to.
Simplified expenses
I don't think there's a definitive answer for a soletrader under simplified expenses...possibly business mileage/total mileage x input VAT.
Although, I can't then see why one would use simplified expenses if VAT registered, as they'd still need to keep comprehensive records for VAT purposes so it loses any benefit.
Isn't the 45/25 system a simplified - solely mileage-based - concession not meant to be analysed for its components - or to be claimed in addition to any other vehicle expenses?
In this particular case, who owns the vehicle(s)?