Car Expense

[TMEUK]

Hi Everyone,

This is my first post so apologise if I am in the wrong room or asking a question already asked! I did do a quick search but could find nothing

I am setting up as a sole trader and have a vechile, which we use exclusivly for the business, it is sign written etc and that's it's purpose in life.

I understand that I am able to put the diesel through the company but must keep the recipts and a mileage log. I think that's right?

But what about when it comes to other expenses such as tax, insurance, MOT, servicing? Can these also be paid for by the company?

The other thing that crossed my mind is this, should the car be registered to the company as the legal owner or me. I realise they are one of the same thing but am just anxious to get it right!

Any advice would be truly appreciated.

Simon

 

[yankee candleman]

Is it a car or van?

 

[TMEUK]

It technicaly a people carrier a chrysler voyager, but we have taken the back seats out so we can get stock etc in and had it sign written.

 

[elaine@cheapaccounting]

As a sole trader you can for the business use as a percentage of overall use. HMRC will find it difficult to understand if there is no personal use.

have a read of the notes to the SA103 self employment return as to what you can claim:

http://www.hmrc.gov.uk/worksheets/sa103f-notes.pdf

 

[yankee candleman]

It technicaly a people carrier a chrysler voyager, but we have taken the back seats out so we can get stock etc in and had it sign written.

Makes no odds I am afraid, to have it deemed as a commercial vehicle it must meet much more criteria than that. As above, the HMRC will not accept that this is not used for private use as well so you can claim so much back bor it but not all. You can not claim VAT on fuel but can offset business fuel against your taxes but doubt you will get away with more than 50%. Watch out you do not try to claim it as a company car either as you will find the taxation quite high on its emissions.

You are probably better paying yourself a car allowance and claiming the mileage back that way.

 

[elaine@cheapaccounting]

The OP is a sole trader - the rules you give are for company vehicles

 

[TMEUK]

Thanks for the advice and the form SA103 is very helpful.

Sorry to be a bit dim but just to clarify, are we saying that even if the car were registered to the company and no personal mileage is undertaken, I should claim that a percentage was personal? To avoid any problems with HMRC?

Would the best way to do this be via a mileage book?

I was thinking about the mileage option, but of course you have to have your own funds to pay up front for the fuel and then claim it back. Like most people we are quite tight financialy at the moment with lots of money just gone in to the company for stock etc. So I thought to ease the starin we can pay for fuel via the company and any other associated running costs.

Thanks for your understanding, I am sure the penny will drop at some point!

 

[yankee candleman]

I understand that I am able to put the diesel through the company but must keep the recipts and a mileage log. I think that's right?


Simon

Sorry Elaine, that bit threw me. When Simon said he was putting it through the company I thought they meant as a company car.

So as a sole trader you still can't claim the VAT back on fuel or more than half the expenses on the car anyway, is that right?

Also, the car can not be modified for business in such a way to be designated a commercial vehicle without a certificate of compliance to requirements of certain things, such as no rear windows etc. Not sure of all the finer points but the OP is basically saying the MPV is being used for business use which will never wash with the HMRC but they need to be looking into what they can and can't claim on their vehicle which can be found at HMRC or here at this link http://www.mybusiness.co.uk/YaRnsxJoR0cJdg.html

Of course, I would talk to your accountant beforehand.

 

[elaine@cheapaccounting]

hold on - can I check. You said you are a sole trader.

Now you refer to a company

can you confirm what the business is please

 

[elaine@cheapaccounting]

So as a sole trader you still can't claim the VAT back on fuel or more than half the expenses on the car anyway, is that right?

As I said you can cliam in proportion as follows:

business miles as a % of total miles.

See the SA103!

 

[elaine@cheapaccounting]

here is the link to vat on car expenses:

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

 

[yankee candleman]

Thanks for the advice and the form SA103 is very helpful.

Sorry to be a bit dim but just to clarify, are we saying that even if the car were registered to the company and no personal mileage is undertaken, I should claim that a percentage was personal? To avoid any problems with HMRC?

Would the best way to do this be via a mileage book?

I was thinking about the mileage option, but of course you have to have your own funds to pay up front for the fuel and then claim it back. Like most people we are quite tight financialy at the moment with lots of money just gone in to the company for stock etc. So I thought to ease the starin we can pay for fuel via the company and any other associated running costs.

Thanks for your understanding, I am sure the penny will drop at some point!

You keep mentioning the company so am getting more confused myself.

Are you simply you trading as someone or a registered company?

Also, the only people who can solely claim a car is never used for private mileage are people such as Taxi Drivers, Learner Drivers, Lease companies etc, you will cause more problems than not if you try to say this is so. Traveling to and from work is classed as private mileage as well although using a home as an office may or may not get round this one.

 

[yankee candleman]

here is the link to vat on car expenses:

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

Surely as a sole trader just starting up they will not be VAT registered anyway?

 

[elaine@cheapaccounting]

Surely as a sole trader just starting up they will not be VAT registered anyway?

I was answering your vat question - not the OPs!! And putting right the mis-information you gave!

Your question was:

So as a sole trader you still can't claim the VAT back on fuel or more than half the expenses on the car anyway, is that right?

You really are complicating things.

 

[TMEUK]

Sorry, I am confusing everyone! I am a sole trader. It's just force of habit because we keep all finance etc seperate, I always refer to me and company!

We are not VAT registered if that confuses things more

 

[yankee candleman]

I was answering your vat question - not the OPs!! And putting right the mis-information you gave!

Your question was:

So as a sole trader you still can't claim the VAT back on fuel or more than half the expenses on the car anyway, is that right?

You really are complicating things.

So basically she can only claim 50% of expenses etc, is that right to simplify it?

 

[TMEUK]

Is a he Sorry guy's didnt want to cause a problem.

 

[elaine@cheapaccounting]

Thanks for the advice and the form SA103 is very helpful.

Sorry to be a bit dim but just to clarify, are we saying that even if the car were registered to the company and no personal mileage is undertaken, I should claim that a percentage was personal? To avoid any problems with HMRC?

Would the best way to do this be via a mileage book?

I was thinking about the mileage option, but of course you have to have your own funds to pay up front for the fuel and then claim it back. Like most people we are quite tight financialy at the moment with lots of money just gone in to the company for stock etc. So I thought to ease the starin we can pay for fuel via the company and any other associated running costs.

Thanks for your understanding, I am sure the penny will drop at some point!

Pay via the business and then on the SA103 include the private proportion of your costs in the disallowable box - see this return:

boxes 31 to 45.

So say you did 8000 business miles out of 10000 - then claim 100% and disallow 20% (i.e. claim 80%).

 

[elaine@cheapaccounting]

So basically she can only claim 50% of expenses etc, is that right to simplify it?

No this is not correct

 

[yankee candleman]

Then I think they will have great difficulty proving otherwise on a private vehicle.

I have read your link to for the SA103f and it is very simple but having just had a meeting with the VAT man who apparently is the tax man as well now just to make it twice as scary he said that we could claim 50% of expenses accrued towards the vehicle and running costs.

So unless you can simplify it for me now Elaine, I am confused.

Maybe we are treated in a different way as a sole trader who is not VAT registered, not sure now.

 

[elaine@cheapaccounting]

Guidance is very clear - keep a log of all miles and those which are business (nature of trip, date, mileage etc)

Then claim as I have said.

Sorry but I do not know how to make it any simpler than:

claim this proportion

business miles / total miles x motor costs

What don't you understand?

 

[elaine@cheapaccounting]

Did you keep a log of the miles done - maybe that is why is was queried?

 

[elaine@cheapaccounting]

more reading:

Motoring expenses

You can deduct the cost of using your car for business purposes. There are two ways of working out how much you can deduct:

• a fixed rate for each mile travelled on business, using our fixed mileage rates
• the actual expenses, worked out using detailed records of business and private mileage to apportion your recorded expenditure

 

[yankee candleman]

It is not that I don't understand Elaine, far from it. I am just simply saying that what you are saying and what I was told by the powers that be just a few days ago differ. As I mentioned in another thread, my accountant is a bit of a lunatic and I am not arguing with you but saying the VAT/TAX man disagreed with this and said we could not claim VAT back on fuel, could only claim 50% of the VAT back on expenses and only claim 50% business use.

My earlier advice was for company car usage as I thought the OP was a company.

Certainly not trying to upset you or catch you out, just giving my experience/advice to Simon.

Do you agre about the car not being able to be claimed for as a commercial vehicle though as this may help them reconsider selling the MPV if it is not used at all for private use and buying a van which they can then claim 100% on?

 

[elaine@cheapaccounting]

The 50% vat applies to lease payments on a car.

As an accountant I quote from HMRC rules. If HMRC told me different I would query against the rules and ask for clarification.

I was not party to your meeting with HMRC so cannot comment on your circs.

If you are a limited company the rules are very different - so that is one think to bear in mind.

Otherwise I think this is something you need to take up with your accountant.

 

[yankee candleman]

MY accountant is hopefully being considered for treatment as we speak and am currently seeking legal action against her to recover our paperwork. The paperwork she has not lost that is. She is a really sweet old dear on the verge of a breakdown in my opinion but I am not a doctor.

My new accountant should hopefully be more professional and able to have a conversation without screaming, crying or forgetting who I am.

Thanks.