In last month’s enews we reported on
the changes to the procedures for input VAT
recovery by employers on employees’
mileage allowances. Customs have issued further
clarification of the evidence required to
support a claim for input VAT recovery. We
set out below a summary of the procedures:
-
The change comes into
effect from 1 January 2006 regardless of
the VAT return period end date. From that
date, employers should retain VAT invoices,
including less detailed garage VAT invoices
their employees obtain from the fuel supplier
as proof of purchase.
-
Customs acknowledge that
businesses will need a little time to make
the necessary changes to their arrangements
in order to hold VAT invoices in support
of their claims. Therefore, Customs will
be administering the change with a ‘light
touch’ until such time as businesses
have had a reasonable period to adjust to
the new requirement.
-
Clearly, a claim cannot
be supported by a VAT invoice which is dated
after the dates covered by the claim. This
means, in practice, that it may be advisable
for employers to arrange for their employees
who use, or may use, their cars for business
purposes to retain all fuel invoices. This
will ensure that, at the end of the claim
period, the value of business fuel is covered
by an invoice.
It is nice to see that Customs will initially
be operating a ‘light touch’ approach
to these new rules.
Internet Links:
To read Customs full guidance go to:
Customs
clarification
To view the advisory fuel rates go to:
Car
fuel rates
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