Eurpoean 6th Directive

anyone know anything about this?

specifically:

The fuelcard people sent me a letter which says: "Currently, UK businesses can reclaim the 17.5% VAT on all fuel bought for business trips"

it then goes on to say that under the new directive, this will only apply to fuel invoiced directly, e.g. bought with a fuel card or company credit card.

Now, it's a fair bet that this won't apply to me. But on the offchance and before I spend half a day trying to track down the information, does anyone know more about this relcaiming vat - what sort of conditions have to be met, what kinds of business use can be claimed back on, etc...?

Reply to
Austin Shackles
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Fuel bought for business use is a business expense, VAT can be reclaimed, end of story IMHO, IANAL... The tricky bit is when the fuel is partly used for business and partly for non-business but isn't that why the Fuel Scale Charge exists?

I suspect some half witted journo(*) has got the wrong end of the stick again, like they do 99% of the time.

(*) I some times think that people only become journalists as they are too badly educated/thick to do anything else. Fortunately there are some good ones out there but not many when you consider how many there are in total.

Reply to
Dave Liquorice

Just "6th directive" sounds bogus. The names are pretty detailed.

I can see the EU wanting to make some administrative changes to close apparent loopholes on business fuel use, and I suppose a fuel card could make it easier to manage for a business. But this sounds like a scare story.

Reply to
David G. Bell

On or around Fri, 26 Oct 2007 13:48:25 +0100 (BST), "Dave Liquorice" enlightened us thusly:

thing is, I'm not registered for VAT. Being able to claim the VAT back and having to pay it on the income doesn't help much. But if there's a (legal) way I can claim the VAT back and NOT have to pay it on the income...

Reply to
Austin Shackles

Ah I think the assumption is being made that a business is VAT registere= d. Without registration you can't charge or claim back VAT and I don't see =

that changing.

You don't pay VAT on your income you charge it. If the majority of your =

customers are VAT registered it makes little difference to them as they =

claim back the VAT you charge them.

I'm VAT registered, use "cash accounting" ie I account for the VAT when =

the invoice is paid not when I raise it. I'm also on the "Fixed Rate Scheme"(*) which means I simply take my gross (VAT inclusive) income and= pay HMR&C a fixed 10.5%, this is saving me about =A3100/qtr compared to =

normal VAT accounting where you account for each individual transaction.= That is another =A3100/qtr in my pocket not the governments and non-taxa= ble AIUI.

(*) The fixed rate you use is set depending on the business sector you a= re in.

Reply to
Dave Liquorice

Dave,you are correct in what you are saying except for the extra =A3100/ qtr being untaxed.At year end that =A3400 will be in your accounts as income and will be taxed the same as the rest of your income less costs and allowances.

Reply to
mark

But in the VAT part of the books not the nett good/services side. Tax is= calculated on the nett good/services amounts not gross.

As I see it and read the documentation on the FRS, HMR&C choose to only =

collect 10.5% of my gross income as the full amount of VAT owed to them.= I see nothing about transfering any discrepancy between what I pay on the =

FRS (be that a "profit" or could equally be a "loss") into the good/services side of the books. Perhaps you can find some supporting evidence that such a transfer is required?

The FRS is there to make the VAT calculation simpler and quicker for sma= ll business's. To work out how much to transfer from the VAT account to good/services account would mean doing a full VAT calculation, which som= e what defeats the object of the FRS...

Reply to
Dave Liquorice

The amount to transfer is the difference between the rate of VAT you charge and the rate of VAT you pay, applied to your gross income.

Reply to
EMB

Only works if *all* of your inputs and *all* of your outputs are at the =

same rate. Bung in a few purchases from non-VAT registered suppliers and= it goes pear shaped.

I only know I'm "in profit" by =A3100/qtr beacuse I still track VAT in t= he old way. The *only* reasons I do this is simply because it was easy to just add the FRS calculations to my VAT spreadsheet and retain the old a= nd because I don't trust HMR&C... There is no requirement to track any difference between standard VAT working and FRS working.

All the bumpf I read about the FRS just says "take x% of your gross inco= me and send it to us" end of story. Nothing about having to work out any difference and send another y% to the taxman at the end of the year, if = a "profit". The assumption is made that within your business sector the fixed rate will be pretty close to reality, anything "left over" is eith= er your gain or loss.

Please show me a page on the HMR&C site that says any difference (+ or -= ) has to be transferred as "income". Most small businness's on the FRS wouldn't have a clue what the difference actually is as there is no requirement to calculate it and calculate it you must because of the various rates of VAT out there.

Reply to
Dave Liquorice

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.. or go to the following link and type "22/05" into the search box and hit "Business Brief 22/05" then go to the "Recovery of VAT by businesses on road fuel" part.

formatting link
Basically from the look of it, it's an old story that happened and passed in 2005 and early 2006, the result was some repealing of minor legislation and replacing it with nearly identical legislation and the net result to business is no major change;

-------------------- The Government has now introduced secondary legislation to comply with the judgment by repealing the Value Added Tax (Input Tax) (Person Supplied) Order 1991 and replacing it with a new Order to be known as the Value Added Tax (Input Tax) (Road Fuel Purchased By Employees) (Order) 2005.

Under the new Order, employers will be able to continue to treat as input tax the VAT incurred by their employees on fuel costs that are subsequently reimbursed by the employer, either on the basis of the actual cost of the fuel or by means of a mileage allowance. Unlike the existing Order, which the ECJ found to be incompatible with the Directive, the proposed new Order makes it explicit that employers can recover only that VAT on fuel which is for use in their businesses in making taxable supplies and must hold a VAT invoice in support of their claim.

This means that the current arrangements in practice for businesses to recover VAT on fuel purchased by employees are unchanged, except that businesses must now retain VAT invoices to support their claims. The invoice can be a full VAT invoice or a less detailed VAT invoice, as appropriate.

--------------------

It does state there that the employee must have a "full or less detailed" VAT invoice to support their claim for fuel mileage, so I'd have thought that the occasional fuel bill sometime before or after the trip would do. That's just to allow the business to reclaim VAT though.

Reply to
Ian Rawlings

On or around Sat, 27 Oct 2007 11:20:39 +0100 (BST), "Dave Liquorice" enlightened us thusly:

ooops, careless terminology. what I meant was, from the point of view of being registered - I gain in being able to claim VAT back that I've paid on purchases, but I have to charge vat on invoices which means I have to pay that to the taxman. It used to be a good deal running a farm - much of what you buy is VAT-able, but many of the products weren't or were zero-rated. Not sure it's such a good deal now, since they've widened the scope of VAT so much. In normal business terms, I reckon if you're making out of being registered it means your business is running at a loss :-/

Reply to
Austin Shackles

Dave,the way I see it is like this.Just an example figures may not add up. At the end of your financial year you have had income for the year totalling =A330000 ex vat but including the =A3400 you have not had to pay the vat man.Your accountant will then deduct all expenses you incurred in making that =A330000,then deduct your allowances and you will be taxed on the rest. If you are dealing in cash and have quietly put that in your pocket the accountant should still pick it up when he reconciles the vat. If you do your own accounts and have not been including that =A3400 then I hope you do not get a vat or tax inspection.

Mark.

Reply to
mark

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