Vat on business mileage rates
Please can somebody clarify my understanding of the following?
Employer pays employee 40p per mile fixed rate for business mileage in private car per AA rates. This is accepted by HMRC with no further proof required of rate. If the employee provides a VAT receipt for the fuel element (11p-14p depending on engine size and fuel) the employer can reclaim the VAT on this fixed rate which equates to about 2p per mile maximum.
This just seems an unnecessarily cumbersome way to claim VAT when total and fuel rates are already preapproved by HMRC. Clearly the employee has had to purchase VATable fuel somehow in order to carry out the mileage claimed. Is this bureaucracy really necessary? Do employees need to request VAT receipts each time they fill up their private cars just in case they have to incur business mileage? Please tell me I'm wrong!
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