Help with Mileage Claim Form, VAT and Sage!

[jacktaylor67]

Hi All,

I've just set up a template to use for mileage claim form, and need to make sure it's correct, I asked my accountant and they couldn't provide the answer.

First part of the form, I show each trip the employee has used his car for and the total miles travelled, we've agreed to pay 15p per mile.

Which works out at 134 miles at 15p equals £20.10. I've been told to create a receipt (no vat) assigned to Scale Charges (7350), and then pay the employee the £20.10.

With regards to the VAT, using the HMRC advisory fuel rates, his car (2.5 ltr) rate would be 20p per mile. Thus I believe I need to keep VAT receipts for £26.80 (134 x 20p) and then I can claim VAT for £3.99 (£26.80 divided by 7/47).

Then I need to create a receipt into Sage under Traveling (7400) for 22.80, 3.99, 26.80 (Vat Code T1), then a payment for £26.80 (Vat Code T2).

Am I correct or grossly misinformed?

 

[taxattack]

Hi All,

I've just set up a template to use for mileage claim form, and need to make sure it's correct, I asked my accountant and they couldn't provide the answer.

First part of the form, I show each trip the employee has used his car for and the total miles travelled, we've agreed to pay 15p per mile.

Which works out at 134 miles at 15p equals £20.10. I've been told to create a receipt (no vat) assigned to Scale Charges (7350), and then pay the employee the £20.10.

With regards to the VAT, using the HMRC advisory fuel rates, his car (2.5 ltr) rate would be 20p per mile. Thus I believe I need to keep VAT receipts for £26.80 (134 x 20p) and then I can claim VAT for £3.99 (£26.80 divided by 7/47).

Then I need to create a receipt into Sage under Traveling (7400) for 22.80, 3.99, 26.80 (Vat Code T1), then a payment for £26.80 (Vat Code T2).

Am I correct or grossly misinformed?

Not sure I follow, but assuming the employee has bought the fuel, you seem to be claiming more Vat than you have paid for. To reclaim Vat on 26.80, you would need to be paying at least that much.

And who do you pay the 26.80 to?

But perhaps I'm being dozy, it's late and hot!

Chris

 

[jacktaylor67]

Not sure I follow, but assuming the employee has bought the fuel, you seem to be claiming more Vat than you have paid for. To reclaim Vat on 26.80, you would need to be paying at least that much.

And who do you pay the 26.80 to?

But perhaps I'm being dozy, it's late and hot!

Chris

Maybe I'm wrong. But it seems that according to the HMRC advisory fuel rates. They deem the fuel consumed by the employee at 20p per mile based on that car, thus I can claim VAT back. The purpose of this is to claim VAT not to to reimburse the employee as that is handled in a different way (up to 40p per mile).

 

[Fleet Risk]

Hi Jack,

Couple of things.

The HMRC Rate for a car is 40ppm for the first 10,000 miles and 25ppm thereafter tax free. At 15p you are not even covering the fuel cost.

Is the vehicle insured for 'use on my employers business'?
Does the employee have a valid driving licence (have you checked it and copied it)?
Is the car roadworthy?

I have loads of other things for you too if you want them.

 

[jacktaylor67]

Hi Jack,

Couple of things.

The HMRC Rate for a car is 40ppm for the first 10,000 miles and 25ppm thereafter tax free. At 15p you are not even covering the fuel cost.

Is the vehicle insured for 'use on my employers business'?
Does the employee have a valid driving licence (have you checked it and copied it)?
Is the car roadworthy?

I have loads of other things for you too if you want them.

My understanding is the HMRC allowance rate is up to 40ppm, the amount agreed is between the employer and employee.

 

[David Griffiths]

My understanding is the HMRC allowance rate is up to 40ppm, the amount agreed is between the employer and employee.

That's correct. But if you are only paying £20.10 then I don't see how you can claim the VAT based on a notional payment of £26.40. In effect you are only paying 3/4 (give or take) of the fuel costs and as I see things can only claim the VAT in proportion.

That's the most tightfisted mileage rate that I've seen in years, if not decades.

 

[jacktaylor67]

That's correct. But if you are only paying £20.10 then I don't see how you can claim the VAT based on a notional payment of £26.40. In effect you are only paying 3/4 (give or take) of the fuel costs and as I see things can only claim the VAT in proportion.

I can't see any requirement that the allowance has to be same or more than the VAT claim. I believe the employee can also claim the difference between what is paid and 40ppm in tax relief.

If I paid the same to the employee as the HMRC rate is for VAT (20ppm in this case) does the following seem correct.

Employee Allowance Claim: 134 miles x 20p = £26.80.
VAT Claim: £3.99 (£26.80 divided by 7/47).

Receipt (Scale Charges) £26.80, £0, £26.80 (T2)
Payment to employee (Scale Charges) £26.80, £0, £26.80 (T2)

Receipt (Traveling) £22.80, £3.99, £26.80 (T1)
Receipt (Traveling) £-26.80, £-0, £-26.80 (T2)

 

[David Griffiths]

I can't see any requirement that the allowance has to be same or more than the VAT claim.

You can claim the VAT in respect of the fuel (based on approved mileage rate) that you have paid for. If you haven't paid for it, I don't think you can claim it. If you took your argument to the next state, and one of your employees did a journey without claimin the mileage rate, do you think that you could claim mileage when you hadn't paid anything.

I believe the employee can also claim the difference between what is paid and 40ppm in tax relief.

That's correct. It doesn't stop the employee being well out of pocket on the deal.

If I paid the same to the employee as the HMRC rate is for VAT (20ppm in this case) does the following seem correct.

Employee Allowance Claim: 134 miles x 20p = £26.80.
VAT Claim: £3.99 (£26.80 divided by 7/47).

Receipt (Scale Charges) £26.80, £0, £26.80 (T2)
Payment to employee (Scale Charges) £26.80, £0, £26.80 (T2)

Receipt (Traveling) £22.80, £3.99, £26.80 (T1)
Receipt (Traveling) £-26.80, £-0, £-26.80 (T2)

Why so complicated? Bank payment for £26.80, including VAT. Job done.

 

[jacktaylor67]

Why so complicated? Bank payment for £26.80, including VAT. Job done.

I suppose when the allowance ppm rate and the VAT ppm rate are the same a Bank Payment would be the best. But under what nominal code, Scale Charges?

If not and we were paying 30ppm or 40ppm allowance, I suppose a Bank Payment for the allowance and then Journal Debit/Credit for the VAT.

Bank Payment (Scale Charges) £40.20, £0, £40.20 (T2)

Journal Debit (Traveling) £22.80, £3.99, £26.80 (T1)
Journal Credit (Traveling) £-26.80, £-0, £-26.80 (T2)

 

[David Griffiths]

I wouldn't use Scale Charges as that's for a specific VAT charge. I'd either post to travelling expenses or create a new code in the same range for mileage allowances.

Even if the mileage rate goes over the fuel rate you can still use a bank payment. Just enter the net amount £36.21 and manually override the VAT to make it £3.99

 

[jacktaylor67]

Thank you.