Summer 2006 Newsletter


Brave New World

Business Not Pleasure

Summertime Blues

All That Glitters...

Casting The Net

Trust Gordon?

It Ain't Over...

One In The Eye

Keep Your Nose Clean

Foreign Affairs

When Is A Car...

Don't Walk Away

Avoiding, The Issue

Brown Is Anti-PC

VAT's Up Doc?

Fuel's Gold

An Age-old Question?

That's Unfair!

Year In Year Out

How Hard To Try?

It's A Rip-Off!

Outlaws Win

Show Some Restraint

Not Our Problem

They Cannot Be Serious?


Pension Disappointments

Fuel's Gold

If you are VAT-registered, you can get VAT back on expenses - of course, you know that. If you buy petrol for business motoring, you claim back the tax. If your employees buy petrol, you can claim VAT on that too - even if you reimburse them by way of a mileage allowance. So if you pay 40p a mile, and the fuel is 12p of that, then you claim 1.787p (7/47 of 12p) out of the 40p as input tax.

This has always seemed odd, because you have no VAT invoice - only an employee's expense claim. A few years ago the European Commission objected to it, and the European Court said it wouldn't do - there was nothing in the UK law to say that only business fuel could be claimed, and that was wrong.

Customs have now changed the rules to restrict claims to business fuel, and to require a VAT invoice to back them up. What's still odd is that they just want a VAT invoice for "at least as much" as the mileage claim - so if you pay your employee for a 150 mile journey, the VAT is 7/47 of 12p x 150, and you can attach a VAT invoice for "a tank of petrol" to cover it. The amounts don't have to match exactly. It's also not necessary to have one invoice for each claim, as long as the total claimed is not more than the total invoices.

Customs believe that there will be no significant change to the amounts that can be claimed by businesses, but a small change to the paperwork. In fact, the publicity for the change - which applied from 1 January 2006 - has made some people realise that they haven't been claiming all that they could, and Customs may actually find that claims go up. If you haven't claimed anything for mileage allowances in the past, you can still go back three years. If you want help with that, we will be happy to advise you.