Mileage Allowance

[Spydaman]

As a 1 off I recently used my own car to travel to a customer. My employer has agreed to pay mileage allowance but asked for a fuel receipt several weeks later so they can claim the VAT. I don't normally keep petrol receipts but gave them one which was for a bit less fuel than I would have used. They've turned their nose up at this. Is it normal to have to produce receipts? I've never been asked for one before.

Edited by Spydaman on Friday 21st February 07:51

[Leylandeye]

It's not uncommon for HMRC to ask for proof. If this is a one off journey, I suspect you may have a jobsworth.

You should have said you weren't asked for a receipt and didn't keep it.

Just explain that you were just trying to be helpful with the receipt provided.

[smokey mow]

Yes quite normal in all the places I’ve worked.

The receipts also need to cover the amount being claimed.

[SS2.]

I've never produced receipts for fuel when claiming mileage undertaken on company business, not once. And how would that work when you're only doing the occasional [short] journey but already have a fullish tank ?

If using a company car (on my fuel), myself and the company agreed an average fuel economy for that vehicle - I simply made an expenses claim for X miles at Y mpg, with fuel being charged at the current pump price.

If using your own vehicle, HMRC permit a claim of 45p per mile for the first 10,000 miles in that financial year.

[Spydaman]

I'm only claiming for mileage allowance as specified by HMRC not for the actual fuel used. I did 220 miles. The car does about 40mpg so 5.5 gallons. I gave them a receipt for about £12 and used about £30 of fuel. So they are quibbling about being able to reclaiming £3.50 VAT. Seems a bit petty to me.

[SS2.]

At HMRC's tax-free mileage allowance, 45p per mile x 220 miles = £99.00

And your employer is squinnying over being unable to reclaim VAT amounting to less than a pint of beer ? Yes, I'd say that's being extremely petty.

[strattonkillick]

The company can only claim VAT on the portion of the mileage that relates to fuel. This is defined by the current advisory fuel rates. These depend on the engine capacity of the car but are nothing like 45p. The maximum rate is 14p that they could reclaim VAT on.

[strattonkillick]

They will need to be able to show HMRC receipts that relate to at least the VAT claimed. This would be the VAT element of the 14ppm.

[megaphone]

What is the company policy on PPM? It might not be 45p/m

[phil-sti]

strattonkillick said:

The company can only claim VAT on the portion of the mileage that relates to fuel. This is defined by the current advisory fuel rates. These depend on the engine capacity of the car but are nothing like 45p. The maximum rate is 14p that they could reclaim VAT on.

Not necessarily, if you aren’t claiming a car allowance or it isn’t a company vehicle I’d expect the full 45p

[SS2.]

phil-sti said:

strattonkillick said:

The company can only claim VAT on the portion of the mileage that relates to fuel. This is defined by the current advisory fuel rates. These depend on the engine capacity of the car but are nothing like 45p. The maximum rate is 14p that they could reclaim VAT on.

Not necessarily, if you aren’t claiming a car allowance or it isn’t a company vehicle I’d expect the full 45p

I think the point being made is that whilst an employee can claim 45p per mile (tax-free) for using their own vehicle whilst on company business, the Company can only reclaim VAT on the fuel element of that charge..

[Joe5y]

SS2. said:

At HMRC's tax-free mileage allowance, 45p per mile x 220 miles = £99.00

And your employer is squinnying over being unable to reclaim VAT amounting to less than a pint of beer ? Yes, I'd say that's being extremely petty.

This. Business mileage if in your contract is 45p per mile.

[strattonkillick]

We are only talking about the VAT. That can only be reclaimed on a maximum of 14ppm. Therefore a fuel invoice that shows the amount of VAT equivalent to whatever 14ppm (maximum) equates to will suffice for VAT purposes. The mileage reclaim is as per the contract.

[sgrimshaw]

strattonkillick said:

They will need to be able to show HMRC receipts that relate to at least the VAT claimed. This would be the VAT element of the 14ppm.

I don't believe that is the case.

Do you have evidence of that?

[sgrimshaw]

Spydaman said:

I'm only claiming for mileage allowance as specified by HMRC not for the actual fuel used. I did 220 miles. The car does about 40mpg so 5.5 gallons. I gave them a receipt for about £12 and used about £30 of fuel. So they are quibbling about being able to reclaiming £3.50 VAT. Seems a bit petty to me.

Next time they want you to use your own car to visit their customer, tell them your car is not insured for business purposes (regardless if it is or not) and request they provide you with a pool or rental car.


If you do want to use your own car, then make sure it is insured for business use.

It won't necessarily increase your premium, but should anything happen and a claim be made you can be sure the Insurance Co will be looking for any reason not to pay out.

[strattonkillick]

sgrimshaw said:

strattonkillick said:

They will need to be able to show HMRC receipts that relate to at least the VAT claimed. This would be the VAT element of the 14ppm.

I don't believe that is the case.

Do you have evidence of that?

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit55400#Input_tax_when_employees_are_paid_a_mileage_allowance

Input tax is calculated by multiplying the fuel element of the mileage allowance by the VAT fraction (VAT rate divided by 100 + VAT rate). The allowance paid to employees must be based on mileage actually done. Business records must be kept to back this up. The business must retain records for each employee claiming a mileage allowance to show:

the mileage travelled;
whether the journey is both business and private;
the cylinder capacity of the vehicle;
the rate of mileage allowance; and
the amount of input tax claimed.



According to the above HMRC do not seem to expect to be able to see an invoice at all. So possibly no need to worry about anything.

Edited by strattonkillick on Friday 21st February 13:32

[surveyor]

I remember filling in a form with this requirement years ago.. Never asked for the receipt though.

[sgrimshaw]

strattonkillick said:

According to the above HMRC do not seem to expect to be able to see an invoice at all. So possibly no need to worry about anything.

Agreed, I've never seen it in anything from HMRC although a lot of articles written on the subject by third parties do say VAT Receipts should be obtained.

Been through plenty of VAT Audits with HMRC where VAT was being reclaimed on fuel element of the mileage allowance and they were quite happy to review the detailed calculations, receipts were never mentioned.

[geeks]

We have to stick fuel receipts in with milage claims. I just make sure I get receipt whenever I buy fuel and just add what I have. I have had it kicked back without them once but I just told them that I had lost the receipts and nothing else was said.

[LukeyP_]

I used to have to supply these at last two companies I have worked at, but current one has a dispensation with HMRC so we don't have to.