VAT Flat rate and Petrol expenses

[jchiver]

I am just about to start out in contracting and I will get an accountant but not until I have money coming in. Until then I am trying to work something out.

It relates to the VAT flat rate scheme and business mileage.

The only real expense the company will have is business mileage and I don't know how this is claimed back against VAT? or is it?

If its not then the flat rate scheme seems to be the best option for my business.

Thanks for any help

Jeremy

[VectraMan]

You can claim back the VAT if not on FRS. I always used to do 2p per mile, but you need to keep receipts to back it up (i.e. you need to have receipts for at least the amount you claim for, and back when I did it I'd always fall slightly short of 2p per mile). You can actually claim a proportion of costs of repairs etc. too if you want to get into it.

Most of us just use the FRS, where you don't claim back the VAT on small things and also don't have to keep wodges of receipts.

You need to work out if the amount you gain by being on the FRS outweighs the amount you lose by not being able to claim back VAT on petrol and other costs (accountancy fees for one).

[Greg@CapitalCity]

Yes you can, but probably no benefit

You can claim back VAT on fuel (when claiming mileage) if your business is registered for VAT on the standard scheme. The calculation and record keeping are a little onerous - FRS is probably the way to go anyway.

(1) Determine the latest fuel advisory rate (HM Revenue & Customs: Company cars - advisory fuel rates from 1 June 2011)
(2) Multiply this by the number of miles travelled - and then divide by 6 to get the VAT amount you can claim;
(3) Make sure you have enough petrol receipts to show you actually purchased the fuel in the first place;

Good luck!

[Sausage Surprise]

FRS then claim your mileage at 45p for first 10k then 25p for the rest.

[SimonMac]

FRS then claim your mileage at 45p for first 10k then 25p for the rest.

WHS

[jchiver]

thanks sounds like the best bet.

[kaiser78]

There is a recent thread in the Welcome / FAQs section on this, which may also be of use.

[jchiver]

There is a recent thread in the Welcome / FAQs section on this, which may also be of use.

thanks

[Sockpuppet]

You can claim back VAT on fuel (when claiming mileage) if your business is registered for VAT on the standard scheme. The calculation and record keeping are a little onerous - FRS is probably the way to go anyway.

(1) Determine the latest fuel advisory rate (HM Revenue & Customs: Company cars - advisory fuel rates from 1 June 2011)
(2) Multiply this by the number of miles travelled - and then divide by 6 to get the VAT amount you can claim;
(3) Make sure you have enough petrol receipts to show you actually purchased the fuel in the first place;

Good luck!

divide by 5 shirley?

[Greg@CapitalCity]

Six

divide by 5 shirley?

The current VAT fraction is 1/6.

Take a VAT inclusive price (say £120), divide by 6 (= £20), and you get the VAT component of £120.