VAT on motoring costs & Flat Rate mileage

VAT on motoring costs & Flat Rate mileage

Didn't find your answer?

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 ?

Replies (7)

Please login or register to join the discussion.

avatar
By bajones
12th Feb 2015 12:57

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.

 

 

Thanks (0)
Portia profile image
By Portia Nina Levin
02nd May 2015 10:59

(No subject)

Thanks (0)
avatar
By bajones
12th Feb 2015 14:00

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.

Thanks (0)
Replying to Wilson Philips:
Portia profile image
By Portia Nina Levin
02nd May 2015 10:59

(No subject)

Thanks (0)
Replying to Wilson Philips:
avatar
By SolutionsTAS
12th Feb 2015 14:34

Thanks for the comments and indeed having thought about it, the business with a turnover above the VAT threshold, must base it`s motoring costs on actual expenses. The previous agent has claimed on the 45p/25p basis, though turnover was £140k last year.

Whilst, not relevant in this case, if hypothetically, the business turnover was sub £81000, then they could be voluntarily VAT registered (this business is a fish retailer, zero rated supply, but can claim input VAT on expenses) , claim mileage rate on business miles, and presumably claim input VAT on vatable motoring bills. For accounts and income tax purposes, I would presumably reduce the gross mileage clam by the input tax suffered ?

Thanks (0)
Replying to Mr_awol:
avatar
By SolutionsTAS
12th Feb 2015 16:05

I am grateful for your comments and stand corrected on the change in legislation, but I am struggling to understand the double entry for the input VAT reclaimed. If motoring costs (mileage rate) are not restricted, where do I post the input VAT ?

Thanks (0)
avatar
By emanresu
13th Feb 2015 17:28

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)?

Thanks (0)