VAT On Mileage?

[Sockpuppet]

Hello,

When I become VAT registered (hopefully tommorrow or day after) I can finally submit my claim to the client for payment and expenses. I am charging them 40p/mile for travel (i work from home) and all these are to different client/supplier sites so all legit and not my "perm place of work etc".

Do I have to add VAT onto this? I searched and found a thread on hotel expenses where the advice was to add VAT onto the bill (vat on vat?) but how does this sit for mileage as do this count as one of my "supplies".

I say yes, accountant has not got back to me yet so asking for some advice here.

Also can I claim the VAT back on any of this? I'm not sure how I could as how can I equate 40p/mile into any amount of fuel used for claiming the VAT back. I'm not sure if I am going to be flat rate yet (doubt it as though under £100k/year I have some large capital expenditure items under £2k I'd like to claim back).

Cheers
Sock.

[malvolio]

Opinions vary, but if you assume the VAT element of your 40p a mile is 1p when working out the VAT balance you won't go far wrong (the logic is that VAT is not applied to the duty that makes up most of the cost of a litre of petrol. If you work it out there's about 1.4p a litre VAT in the overall cost)

However, that is mileage paid to you. If you are charging mileage to the client at the same (or even a different) rate, you should add VAT to the total. The rule for all VAT invoices is work out all the things you are charging for, add them up and add VAT to the total as the last step you take. Don't worry about apparent inconsistencies, the VATman really won't take any notice.

[Nixon Williams]

I can agree with the above comment.

The VAT that you reclaim (assuming you are not on the Flat Rate Scheme) is the VAT on the fuel portion of the mileage, each car will be different. The Revenue publish fuel rates for different engine sizes and whether it is petrol?diesel:

Petrol Diesel

Upto 1400cc 10p 9p
1401 - 2000cc 12p 9p
over 2000cc 16p 13p

The VAT element is 7/47 of the above so on a petrol 1500cc car the VAT reclaimed would be 1.78 pence.

I would check over the Flat Rate as even with some costs you could well be better off on the scheme, remember that in the first year there is an additional 1% benefit.

I hope this helps

Alan

[wantacontract]

how i am currently charging VAT

this is how i am charging vat at the moment...

i charge client 26p per mile.....and the vat on that...

i charge my ltd 40p per mile...but do not charge vat on that....

think thats right..but will query my accountant, when coming to do the 1st quarter vat returns in dec...

[gravesendboy]

Vat on Mileage

As you now need to keep petrol receipts if you are going to claim the vat on mileage , I would suggest that you do not claim the vat as it is too much hassle
Just keep your mileage logs and ignore the vat

[wantacontract]

ahhh crap..

what about the 2000 miles i've done and not got a receipt for....but claimed expenses on from the client...

will start keeping receipts now though

[wantacontract]

my accountants says

the expenses claimed from the client is regarded as income...so charge vat on that....

[Nixon Williams]

1. VAT should always be added on any mileage (and other expenses) that you bill your client for.

2. Assuming that you are NOT on the Flat Rate scheme, then you can reclaim VAT on the mileage incurred. If you do 10,000 miles per annum this can be around £150 - your accountant should do this for you anyway.

3. You do need to keep receipts (after a recent EU ruling) if you claim VAT back. Obviously if on the Flat Rate scheme no receipts are needed as no VAT is reclaimed.

I hope this clears this up.

Alan

[wantacontract]

thanks alan

since i don't have any receipts for the first 2000 miles...i won't be claiming back on the vat incurred..

the good thing is I will be flat vat registered soon....in dec....

so no more bother on this VAT stuff!!!

[Nixon Williams]

I agree, the Flat Rate Scheme is easier to operate and for most of our clients, it is financially better as well.

Alan