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How to recover VAT on Fuel on cars used by employees

A company pays for all fuel on company cars used by employees. How can we recover VAT on fuel?

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    You can deal with the VAT charged on the fuel in one of four ways:

    1. Reclaim all of the VAT. You must use the fuel only for business purposes.
    2. Reclaim all of the VAT and pay the appropriate fuel scale charge – this is a way of accounting for output tax on fuel that your business buys but that’s then used for private use.
    3. Reclaim only the VAT that relates to fuel used for business mileage. You’ll need to keep detailed records of your business and private mileage.
    4. Not reclaim any VAT. This can be a useful option if your mileage is low and also if you use the fuel for both business and private motoring. If you choose this option you must apply it to all vehicles including commercial vehicles.


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