Twice the V.A.T???

S4R4H

Hi,

Really hope someone is able to help.

I currently do the books for my husband's franchise with a courier firm and he has decided to register for VAT.

I will need to file the first VAT return at the end of February, so am getting my head around what we can and cannot claim for.

My husband has a fuel card, provided from the courier company. He is currently paying the VAT on the fuel and also the VAT on the total amount from the courier company. Effectively, he is being charged for VAT twice.

Can we claim back the VAT twice - i.e. the VAT cost from Shell and the VAT cost from the courier company?

Hope this makes sense.

Many thanks for any replies.


Sarah

paddyrg

You may also try the Small Biz forum here, it may have different VAT experience

agrinnall

But surely he isn't paying VAT on the fuel? Aren't the courier company paying for the fuel he gets with his fuel card, then they charge him for all the relevant franchise expenses plus VAT? It seems to me that the fuel charge that is passed on should be the pre-VAT one, with the VAT added on to bring up the full invoice amount. If that's not happening then it sounds like the courier company have made a mess of their accounting.

pelirocco

agrinnall wrote: »

But surely he isn't paying VAT on the fuel? Aren't the courier company paying for the fuel he gets with his fuel card, then they charge him for all the relevant franchise expenses plus VAT? It seems to me that the fuel charge that is passed on should be the pre-VAT one, with the VAT added on to bring up the full invoice amount. If that's not happening then it sounds like the courier company have made a mess of their accounting.

Or they may be making a mark up on the fuel provided ( more likely)

OP you only claim back VAT on invoices you have received and paid for )or are liable for if you are cash accounting)

warwicktiger

I agree, check the price per litre quoted.

scragend

S4R4H wrote: »

My husband has a fuel card, provided from the courier company. He is currently paying the VAT on the fuel and also the VAT on the total amount from the courier company. Effectively, he is being charged for VAT twice.

But surely if he has a fuel card he isn't paying for the fuel at the pump? He fills up and hands over the fuel card but no money changes hands at the petrol station?

Then later he gets a bill from the courier company for the fuel. This may be marked up but even if it is, it will include the cost + VAT of the fuel, and the markup + VAT if there is one.

I can't see how he is paying VAT on the fuel twice.

agrinnall

Is there an echo (echo, echo....) in here?

00ec25

S4R4H wrote: »

Can we claim back the VAT twice - i.e. the VAT cost from Shell and the VAT cost from the courier company

no you cannot claim the VAT twice
he is only making one payment - the franchise company charge, he is not paying Shell directly so they are irrelevant

1) Hubby buys £120 of fuel at Shell (comprising £100 fuel £20 VAT) "pays" via fuel card

2) courier firm pays the fuel card company £120 to settle the charge from the fuel card company,

3) the courier then recovers the £20 VAT themselves as their own input VAT and charges £100 against hubby's franchise account in their own books

4) courier firm raises invoice against hubby's franchise account for £100 + £20 output VAT because the transaction is now between courier and hubby meaning the courier must charge output VAT on the "sale" they are making to hubby

5) hubby pays invoice from courier and reclaims the £20 as his own input VAT charged from the courier

Alternatively if courier charges more than £120 (gross incl VAT) then there are applying a mark up on their "sale" of fuel to hubby. Perfectly legal to do so but he should check the terms of his franchise agreement to establish what is supposed to happen with recharges

If you think you can claim the £20 VAT on hubby's original Shell receipt then you are seriously misunderstanding the VAT and who has physically paid whom.