VAT on private mileage in company van
Discussion
Just a quick query.
Our company has recently started charging us VAT on the reimbursement we pay for using our vans for private mileage.
Just wanted to check this is kosher. If it is should they use a fuel calculation that takes the price of fuel as excluding VAT? (It seems like VAT is being claimed twice).
Our company has recently started charging us VAT on the reimbursement we pay for using our vans for private mileage.
Just wanted to check this is kosher. If it is should they use a fuel calculation that takes the price of fuel as excluding VAT? (It seems like VAT is being claimed twice).
The rate we pay back is written down as a 'standard procedure'.
It's basically:
manufacturers combined MPG = 53.3 mpg - 17% = 44.2mpg. Fuel is £5.54 a gallon (1.2180 = price of fuel per litre) So mileage = 5.54/44.2 x 100 = pence of 12.5 per mile.
So we reimburse the company with 12.5 pence per mile of personal use (which is a good rate I think?).
The company want us to pay VAT on top of the 12.5p which they have never done before. Just wondering if this is right. They are not 'selling' us the mileage. I imagine that as they use a fuel card provider they do not pay VAT on the fuel in the first place yet still charge us using a rate that includes VAT (£1.2180).
Not sure that makes any more sense
It's basically:
manufacturers combined MPG = 53.3 mpg - 17% = 44.2mpg. Fuel is £5.54 a gallon (1.2180 = price of fuel per litre) So mileage = 5.54/44.2 x 100 = pence of 12.5 per mile.
So we reimburse the company with 12.5 pence per mile of personal use (which is a good rate I think?).
The company want us to pay VAT on top of the 12.5p which they have never done before. Just wondering if this is right. They are not 'selling' us the mileage. I imagine that as they use a fuel card provider they do not pay VAT on the fuel in the first place yet still charge us using a rate that includes VAT (£1.2180).
Not sure that makes any more sense
It just reinforces my view. They want to make you pay more to them and they are using VAT as the excuse. I would argue that they should stick to the original values agreed.
I assume that they are a VAT registered business so any VAT they are charged by the people they purchase the fuel from is fully reclaimed. So VAT should never be an issue for them and there should be no requirement for you to have to pay them any extra amount that is related to VAT.
Of course, in reality, the extra they want from you is nothing to do with VAT at all - just a lever to make you pay more.
Do you know if they have had a VAT inspection recently and, if so, have they been given any instructions by VAT officers.
I assume that they are a VAT registered business so any VAT they are charged by the people they purchase the fuel from is fully reclaimed. So VAT should never be an issue for them and there should be no requirement for you to have to pay them any extra amount that is related to VAT.
Of course, in reality, the extra they want from you is nothing to do with VAT at all - just a lever to make you pay more.
Do you know if they have had a VAT inspection recently and, if so, have they been given any instructions by VAT officers.
Thanks Eric. They are VAT registered , so assume all VAT is claimed back. The mileage rates occasionally vary (once every year or so as average fuel rates change) so if they wanted more money back they could get it from us that way.
I don't know if they have had a VAT inspection recently as that would happen at the head office rather than at our satellite office.
I'll ask the probing question of them as to why they want us to pay VAT when it is presumably fully reclaimed already.
It seems a little cheeky they use a fuel rate in the calculation that already includes VAT and therefore surely our reimbursement also already includes VAT.
I don't know if they have had a VAT inspection recently as that would happen at the head office rather than at our satellite office.
I'll ask the probing question of them as to why they want us to pay VAT when it is presumably fully reclaimed already.
It seems a little cheeky they use a fuel rate in the calculation that already includes VAT and therefore surely our reimbursement also already includes VAT.
That is exactly my thought too.
The way a VAT man might see the way their system is working is that they are selling fuel to you. Therefore, they should be declaring VAT to HMRC on the amounts they are receiving from the workers who pay them for the use of the fuel. Perhaps they hadn't factored into their sums the fact that they needed to be paying over to HMRC the VAT content on the fuel they are selling you?
The way a VAT man might see the way their system is working is that they are selling fuel to you. Therefore, they should be declaring VAT to HMRC on the amounts they are receiving from the workers who pay them for the use of the fuel. Perhaps they hadn't factored into their sums the fact that they needed to be paying over to HMRC the VAT content on the fuel they are selling you?
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