I'm having a simple moment, so if somebody could help and / or shake me it would be much appreciated.
Transport company has retained garages for servicing, repairs etc.
Employee uses garage for repairs on private car but it is invoiced to the transport company (for example £100 + vat). Employer then takes a salary deduction of £100.00 and recoves the £20 vat.
My question is, can the employer actually recover the £20 vat?
Replies (6)
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No
You might take a look at this recent Is this fraud? thread.
Just substitute "employee" for "friend"
Not for the business
I agree - the employee should be charged £120. There are two possibilities:
claim the £20 input VAT and pay over £20 output VAT on the recharge to the employee by way of salary sacrifice.do not claim the £20 input VAT.
I think that option 2 is correct as this was not a cost incurred by the company in making its taxable supplies.
Agree with Euan
Option 2 is the more correct way.
Watch out for recharged MOT tests. Technically, they're only exempt if supplied by the testing station.