Claiming for car maintenance and 45p mileage rate?

[Flooble]

I'm usually the first to say "ask an accountant" when people try to get free advice, but in this case I, er, have paid for an accountant and don't actually trust what they have said. I hope I can lean on the kindness of an accountant here to point out if my instinct is correct or my accountant is!

Background: Limited company (multiple employees and directors - not an Arctic Systems setup). Private car used for business and pleasure. Company reimburses business mileage at the 45p per mile (to 10000 miles) rate.

Vehicle needs £1000 of repairs. The book-keeper thought he'd heard that the company could pay (without BIK or other implication, i.e. free of charge to the employee). The book-keeper checked with the accountant who initially said "yes, no problem". I challenged this (it just smelt wrong, I have ZERO accountancy knowledge) and the second response was a slight retreat to "Er, well, the company can claim the VAT back on it".

Does that sound even vaguely correct to you guys? I always thought the 45p per mile was supposed to cover all the costs of running a car, including repairs, servicing etc.

[sixspeed]

You're right, they're wrong. Get new accountants.

[Countdown]

Flooble said:

Does that sound even vaguely correct to you guys?

No

Flooble said:

I always thought the 45p per mile was supposed to cover all the costs of running a car, including repairs, servicing etc.

Yes.

I'm not sure what the VAT situation has got to do with anything tbh. If the company reclaims the VAT and then recharges the employee in any way they would have to charge VAT on the invoice.

Anyway as things stand it's best for the employee to reimburse the company. Or the company can process it via payroll so that the correct tax and NI is collected.

[Flooble]

Thanks guys - really appreciate hearing that I am not mad!

Time for an interesting "chat" on Monday, thanks again.

[LeighW]

As already said, the 45/25p rate is to cover all running costs. One thing that is often missed though, is that the company can reclaim VAT on the mileage (based on HMRC's advisory fuel rates though, not the full 45/25p rate).