Claiming company expenses and VAT

00ec25

redpete wrote: »

I've used my personal credit card to pay for hotel bills invoiced to me and submitted these - they are counted as valid VAT receipts that the company can use to claim back the VAT.

Like others I would be wary about how HMRC view the expense rather than if the company allow it.

the difference in your case is that the whole reason you incurred a hotel bill was because of business use, if not then you too would face an income tax bill for any personal use benefit.

in the OP's case he is already been paid the (full?) approved mileage rate which does indeed cover the "cost of tyres" as well as his petrol (even if he feels that it doesn't) so if the company pays for servicing of his car on top of that it is not a business related expense it is simply foregone personal expenditure, aka a perk or more correctly a taxable benefit in kind

pjclar02

In answer to the specific question - irrespective of the P11d position, as long as the vehicle is used to some extent for business purposes and the company pays for the maintenance to be done then the VAT is recoverable, just as any other VAT is recoverable when incurred by an employee on behalf of their employer

TheCyclingProgrammer

The general rule is: for a company to be able to recover input VAT, it needs a valid VAT invoice in the company name.

There are additional rules for employee travel and subsistence (including accommodation) expenses, which is why the company was able to reclaim hotel costs in the example somebody gave above.

http://www.hmrc.gov.uk/VAT/managing/reclaiming/travel-subs.htm

Finally, there are also special rules for motoring costs:

http://www.hmrc.gov.uk/VAT/managing/reclaiming/motoring.htm

Reading the above page, it would appear that the company can only reclaim the VAT if the invoice is in the company name and the company pays for it themselves.

So in short, no, probably not.

Also, as others have pointed out, your employer may well allow you to reclaim car maintenance costs but there is no tax deduction available for this. Any payments you receive from your employer will either be put through the payroll as taxable income or reported on your P11D (which you should receive) and be liable to Class 1A NIC (and possibly income tax). I'm not sure of the exact treatment, but it won't be tax free either way.

redpete

00ec25 wrote: »

the difference in your case is that the whole reason you incurred a hotel bill was because of business use, if not then you too would face an income tax bill for any personal use benefit.

in the OP's case he is already been paid the (full?) approved mileage rate which does indeed cover the "cost of tyres" as well as his petrol (even if he feels that it doesn't) so if the company pays for servicing of his car on top of that it is not a business related expense it is simply foregone personal expenditure, aka a perk or more correctly a taxable benefit in kind

I was answering the OP's original question - will an expense invoiced to the OP and paid with the OP's credit card still allow the company to reclaim VAT. The answer is Yes (but as pointed out by someone with better understanding than me, maybe not for car servicing).

I also pointed out that this particular expense may well not be treated as a legitimate expense for income tax purposes.

TheCyclingProgrammer

Irrespective of the VAT issue, yes any reclaimed servicing costs from the employer would be treated as additional taxable income. It would appear on your P11D and result in your tax code being adjusted to recover the tax, I would have thought. There is no relief the employee can claim to reduce their tax for this. It's what AMAPs are for - the 45p/mile rate is designed to cover both the cost of fuel and wear and tear.

Kraft

Great post! Thanks