Key points
- The normal rule is that if a VAT registered business bears a VAT cost for its business that VAT is fully recoverable.
- If the employee has incurred additional costs on charging their company electric vehicle that is a direct and incremental business expense.
- Employers must deal with the personal and business split of the employee’s mileage.
- The employee might prefer to pay back private use element through a salary sacrifice arrangement.
- Redrow Group Ltd case deals with VAT treatment of supplies made to someone other than the party paying the bill.
In 1973 when VAT was introduced to the UK the then government referred to it as a simple tax. It is true – the concept is simple – but in practice it is anything but and made worse by confusing and contradictory HMRC briefs. A word to the wise: HMRC booklets are not statutory ...