VAT on fuel tax - Is this legal?

I think there must be something unethical with the price of fuel. Let me explain. Much of the price of fuel is actually tax. For about every £10 we put in our tank I think about £9 is tax. On top of this we are paying 17.5% VAT. Theoretically, for every £10 of fuel I'm sure we should only pay 17.5p, i.e. the VAT on the actual value of the fuel. However we are paying £1.70. If, like me, you use about £40 per week that means you are paying £353.60 per annum in VAT instead of the £37.44 that I think we should be paying.

In short, I'm sure that it is unethical, if not illegal, to charge tax on tax.

Does anybody know if it is illegal, because if it is, wouldn't it be nice to be able to claim back all the excess VAT for 6 years like the banks, building societies etc have had to do on their overcharging.

That might get rid of Gordon Brown for sure then.

Comments

  • paul_h
    paul_h Posts: 1,074 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    JohnM14 wrote: »
    I think there must be something unethical with the price of fuel. Let me explain. Much of the price of fuel is actually tax. For about every £10 we put in our tank I think about £9 is tax. On top of this we are paying 17.5% VAT. Theoretically, for every £10 of fuel I'm sure we should only pay 17.5p, i.e. the VAT on the actual value of the fuel. However we are paying £1.70. If, like me, you use about £40 per week that means you are paying £353.60 per annum in VAT instead of the £37.44 that I think we should be paying.

    In short, I'm sure that it is unethical, if not illegal, to charge tax on tax.

    Does anybody know if it is illegal, because if it is, wouldn't it be nice to be able to claim back all the excess VAT for 6 years like the banks, building societies etc have had to do on their overcharging.

    That might get rid of Gordon Brown for sure then.

    It's not quite £9 out of £19, tax currently accounts for less than 65% of the cost of fuel, this is the fuel duty of 50.35p/litre, plus VAT at around 15p.

    I believe the charging on VAT on top of duty has been legally challenged before, unsuccessfully. Whilst it certainly does seem to be wrong on the face of it, this has been the system employed since dot, and I'm pretty sure that no government would alter it without good reason.

    The revenue has to be raised from somewhere, and if this practise proved to be illegal, the duty would be simply be adjusted to take account of the reduced VAT income.
  • Whilst I see what you're saying, if they got rid of VAT on on the tax part, then they'd just raise the tax part! Maybe it is unethical, but do you really expect Labour to be ethical?
  • Zazen999
    Zazen999 Posts: 6,183 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Labour are the new Tories - never forget that!
  • Ken68
    Ken68 Posts: 6,825 Forumite
    Part of the Furniture 1,000 Posts Energy Saving Champion Home Insurance Hacker!
    Brown has been the best, the most efficient Chancellor ever, but a poor PM. Bring back Tony Blair.
  • YEAHHH....like brown is sooooo good that tax on everything has gone through the roof and don,t forget the dreaded council tax that has DOUBLED since labour has been in power!!
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