VAT - Recharge

VAT - Recharge

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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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Euan's picture
By Euan MacLennan
29th Jul 2014 18:02

No

You might take a look at this recent Is this fraud? thread.

Just substitute "employee" for "friend"

Thanks (1)
By mrme89
29th Jul 2014 18:39

Thanks Euan, that's the thread I was trying to find!
So if it were to go through employer, should it be put through as gross at £120 (no vat element) and recharged to the employee at £120?

Thanks (0)
chips_at_mattersey
By Les Howard
30th Jul 2014 09:10

Recharge

The company still needs to charge the employee the VAT-inclusive amount.

Thanks (2)
Euan's picture
By Euan MacLennan
30th Jul 2014 10:22

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.

Thanks (1)
RLI
By lionofludesch
30th Jul 2014 10:32

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.

Thanks (1)
By mrme89
30th Jul 2014 10:50

Thanks all, the fog has now cleared.

Thanks (0)