Share this content
9

Reclaiming VAT on mileage expenses

Do we need a VAT invoice?

Didn't find your answer?

Good afternoon,

Our company procedures require employees to submit a VAT invoice for fuel when claiming their mileage expenses - they employee is re-imburesed either way, however we do not reclaim the vat without a VAT receipt.

Is this necessary? - based on the fact that you cannot physivally buy fuel from a non VAT registered source I would have thought that a VAT receipt isn't necessary.

I had a look on HMRC website but I couldn't find an answer - any pointers would be appreciated.

 

Replies (9)

Please login or register to join the discussion.

avatar
By Accountant A
03rd Sep 2019 15:00

Have you tried Google? I find it very useful.

Thanks (0)
Psycho
By Wilson Philips
03rd Sep 2019 15:23

Yes - a VAT invoice is required to at least cover the amount of VAT being reclaimed.

See paragraph 8.10 of VAT Notice 700/64

Thanks (1)
Replying to Wilson Philips:
avatar
By B Roberts
03rd Sep 2019 15:45

Wilson Philips wrote:

Yes - a VAT invoice is required to at least cover the amount of VAT being reclaimed.

See paragraph 8.10 of VAT Notice 700/64

That's great; thank you.

Thanks (0)
avatar
By spidersong
04th Sep 2019 09:05

B Roberts wrote:

Is this necessary? - based on the fact that you cannot physivally buy fuel from a non VAT registered source I would have thought that a VAT receipt isn't necessary.


Funnily HMRC would actually agree with you, for many years you didn't need one, unfortunately the EU cottoned onto this at some point and it was pointed out, via infraction proceedings, that the law said you needed one and merely paying some mileage wasn't acceptable 'alternative evidence'.

The EU won that particular spat and so the Commissioners at the time reluctantly changed their policy and started requiring backup. I do however feel that if similar happened today they wouldn't be so reluctant to change policies seeing as it gives a little hike to the tax take!

Thanks (1)
Replying to spidersong:
avatar
By B Roberts
04th Sep 2019 09:49

spidersong wrote:

B Roberts wrote:

Is this necessary? - based on the fact that you cannot physivally buy fuel from a non VAT registered source I would have thought that a VAT receipt isn't necessary.

Funnily HMRC would actually agree with you, for many years you didn't need one, unfortunately the EU cottoned onto this at some point and it was pointed out, via infraction proceedings, that the law said you needed one and merely paying some mileage wasn't acceptable 'alternative evidence'.

The EU won that particular spat and so the Commissioners at the time reluctantly changed their policy and started requiring backup. I do however feel that if similar happened today they wouldn't be so reluctant to change policies seeing as it gives a little hike to the tax take!

Thanks for the info.

I have lost count of the amount of conversations I have had with employees who look at me as though I am mad when I ask them for a receipt!

They then think that they wont be able to claim their mileage (which makes them angry) and then I explain that they will be paid either way, and they look at me as though I am mad again.

I even had a conversation last week with an employee who provided a receipt that more than covered their work related journey, and they thought that we would reclaim the amount of vat on the invoice (which would be illegal apparently ......).

Thanks (0)
avatar
By JoF
04th Sep 2019 10:07

Make sure it is written in your expenses/staff policies book, email all staff to remind them of that particular policy, hopefully will stop most of the moans and groans.

Where I used to work - no paperwork for one item, whole expenses claim was thrown back at you. Soon makes you get it right first time every time.

Thanks (0)
avatar
By C Graham
05th Sep 2019 10:58

How does it work if the employee claims mileage based on normal rates allowable but eg filled up before the journey and doesn't need to fill up for a while after it? Ie the vat receipt was for personal fuel but he/she recovers the mileage used for business.

And then as the business can only reclaim the vat on the business miles - not the employee's personal use of the fuel they bought, is that just calculated on the basis of the pro rata vat because as OP says, all fuel incurs vat anyway?
?

Thanks (0)
Replying to C Graham:
Psycho
By Wilson Philips
05th Sep 2019 12:12

I'm not sure what your query is. Employee submits a mileage claim, with an invoice showing enough VAT to cover the the VAT element of the mileage claim. It doesn't matter if the invoice is for a full tank covering 350 miles and the claim is for only 1 mile.

Thanks (0)
Replying to Wilson Philips:
avatar
By C Graham
05th Sep 2019 12:37

it's not an invoice it is a vat receipt we're talking about - and therein lies a practical problem - for example when a shared car is used it might be the partner of the employee who originally bought the fuel but the employee puts in a normal AMAP mileage claim.

As the OP stated, the fact that all fuel has a vat element (unless bought outside the UK) its not supporting anything. Not disagreeing with you here - you've clarified the process but once the fuel element is worked out from the AMAP and detail such as engine size are taken into account the amount of admin/process involved probaby outweighs in time the vat recovered.

Also if carrying a passenger on that trip there's a 5p per mile allowance without reporting to HMRC. I don't know how widely this is used?

I guess it is down to how much mileage the business covers.

Thanks (0)
Share this content