A business has the right to reclaim VAT on fuel expenses claimed by employees when they use their own vehicle for works business but it is often a pain to do so.To make a correct claim the business needs two things……
- A VAT receipt is supplied for each fuel expense covering the VAT to be reclaimed and
- An accurate travel log of the employees journey is recorded
The travel record is very important as HMRC will want undisputable proof that the journey being claimed was business related and to this end the following details are important :
- Record where the journey started and finished including postcode
- Who was visited and for what reason
- Date of journey
The other important aspect is that only VAT on the fuel element of the expense should be claimed. (A mileage claim when using a private vehicle often includes wear and tear on the vehicle, Insurance, road tax etc)
Advisory fuel rates and information on their use can be obtained from HMRC’s website here
VAT on taxi fares can be recovered, which is normally a standard rate when charged. The main difficulty is that often taxi receipts do not specify if a charge includes VAT and some self employed taxi drivers may not be VAT registered so do not include VAT on the bill. It is always best to ask your employees to request a VAT receipt when travelling via taxi.
Hotel Accomodation and restaurant bills
Providing that the employee is provided with a vat receipt to add to their claim these types of expense are normally allowable to be reclaimed however…
- Individuals or companies who are acting as contractors don’t count as employees therefore their expenses are not recoverable (unless they recharge the company including VAT)
- Employees taking clients out to dinner is classed as business entertaining which isn’t claimable
Other forms of travel
Most forms of public transport such as train and buses are zero rated so no VAT would be reclaimable against these.