Help settling an expenses argument

[animox]

Hi , If anyone can settle this I would be grateful.

We have a partnership with 4 equal partners and VAT registered
There are no vehicles owned by the partnership
All mileage work mileage in personal cars and is recorded individually and claimed against our end of year personal accounts at 45p/mile.

The dispute is having taken the route above, can you still claim the VAT back on car repairs and also claim the repairs against personal accounts?

In my view you either go the 45p/mile route or put the car through the business and claim all expenses including fuel tax and repairs, you can't do both surely?

 

[Anna Chandley]

In my view you either go the 45p/mile route or put the car through the business and claim all expenses including fuel tax and repairs, you can't do both surely?

That's correct if mileage is claimed you cannot for actual costs.

All mileage work mileage in personal cars and is recorded individually and claimed against our end of year personal accounts at 45p/mile.

I'm not sure if your reference to "end of year personal accounts" is a reference to the partners inidvidual tax returns or the partners current accounts but the mileage should be claimed in the partnership accounts. You cannot make a claim on your individual tax returns for partnership expenses.

 

[Adam (EBS)]

If you do drive your own vehicle for business and claim mileage expenses (45ppm), then your business can claim VAT on the fuel portion of the mileage expense – as long as your business is VAT registered (not flat-rate).

 

[@aiteoconsulting]

Agree with Anna. The 45p / mile rate is approved by HMRC on the basis that it is intended to cover running costs as well as fuel costs. If the partnership also pays for repairs, there is effectively a profit element to the 45p rate which would need to be disclosed as income. Or, in other words, don't put the repairs through the partnership.

 

[animox]

Thanks very much for all the reply's, (I win)
I presume as far as the VAT element of the repairs go, as the invoice is not relevant under the 45ppm scheme it should not be in the accounts to start with.

 

[UK Contractor Accountant]

I have a different opinion to the above.

You can claim the VAT back on the fuel element of the mileage allowance but you can also claim the VAT back on the repairs & servicing provided the invoices are made out to the business.

You can't claim the servicing costs etc as an expense so it will be a VAT standalone claim only.

 

[animox]

I'm pretty sure invoices are in the individuals names not the business. But aren't the individuals the business anyway in a partnership?
Obviously this is not as clear cut as first thought?

 

[animox]

So HMRC says "If you use a vehicle for business purposes, you can reclaim the VAT you were charged on repairs and maintenance as input tax as long as the business paid for the work. It does not matter if the vehicle is used for private motoring or if you have chosen not to reclaim VAT on road fuel." This backs up UK Contractor.

But what is the evidence that the business paid for the work in a partnership? invoice in the businesses name, money leaving business account, or can a partner just put in any repair invoice he has had to pay and get the VAT back?

 

[Fair Price Accounting]

The business can claim the VAT back on the fuel element only.

 

[@aiteoconsulting]

The quote you’ve picked out is from the business tax section - but the cars per your original post are not owned by the business. Back to my earlier point - if the partnership pays for the repairs, there is a profit element to the 45p which will need to be declared on the partners’ self-assessment returns. I leave the VAT points to those more informed on that than I.

 

[UK Contractor Accountant]

Back to my earlier point - if the partnership pays for the repairs, there is a profit element to the 45p which will need to be declared on the partners’ self-assessment returns. I

My understanding is that you put the after VAT cost of repairs to each partners drawings account if paid by the business.

 

[Fair Price Accounting]

If you are claiming 45p per mile you should not be putting anything else through the accounts.An example you do a 200 mile round trip the partnership pays you £90.00.

For the Partnerships books:
we will assume you are using HMRC advised fuel rates @ 14p per mile

The fuel element will be £28.00 for which the partnership can recover the VAT aprox £4.66
The other £62.00 is for wear and tear which VAT cannot be reclaimed

In this situation you only claim expenses submitted by the partners, no other expenses that apply to vehicles should be claimed, they are covered by the mileage claim submitted by the partners.