Firm News

VAT – Tips & General Advice: March 2011

Following a number of VAT health checks carried out by our tax department we have noticed some common errors with regards to reclaiming VAT on fuel costs and business entertaining.

Reclaiming VAT on fuel costs 

Fuel costs for a business can be very costly and it is therefore important that you reclaim as much VAT as possible (only on business travel). There are three main ways in recovering the VAT:

• VAT scale charge – If you reclaim VAT on road fuel for private motoring you must apply the fuel scale charge to account for private usage. The rates can be found on H M Revenue & Customs website.

• Mileage records – If you do not want to use the fuel scale charge because the scale charge you pay is more than the VAT on the fuel, you can keep a log of all of your business and private mileage and apportion the claim appropriately.

• Mileage allowance – If you do not wish to apply the scale charge or find the mileage records an administrative burden, then you can pay a mileage allowance and only claim back the VAT element of the fuel depending on the engine size of the vehicle.

Business entertaining

Recovery of VAT appears to be a very common error. Please note that you cannot recover any VAT incurred on business entertaining as it is specifically blocked by H M Revenue & Customs. You may be however be able to recover VAT on entertaining of overseas clients.

Reclaiming VAT on your home business

If you work from home there is a possibility that you can recover some VAT on utilities (based on business use of the house). Furthermore if your business pays for an office conversion then you should be able to recover the VAT charged if it is for business use.

If you require any further information or think you may need a VAT health check of your business please contact Elliott Buss:

Email: elliottb@bpuaccountants.co.uk
Call: 029 20734100.