Sage 50 help confirms that scale charges should be entered by doing 3 entries to credit output VAT and leave the same balance in motor expenses by entering the gross amount into motor expenses and then taking out the net, so that effectively you have a DR in motor costs to match the CR in the VAT account.
I completely understand this concept and have read that the debit left in motor expenses recognises the scale charge as an expense of the business i.e. the VAT the business is unable to claim.
I may be thinking too much into this and confusing myself...however, I am thinking that since the purpose of the VAT scale charge is to account for the private fuel element, shouldn't the expense be debited to Drawings instead?
It just seems a bit odd to me that by having the scale charge in motor expenses, the business is obtaining tax relief from a cost which must be put through in the first place to account for a private element?!
Could someone just confirm to me that this is definitely allowed, or if drawings would be a more suitable place to debit the scale charge cost?
Thank you very much in advance