VAT on Expense Mileage

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Posted on by WPinkney

Hi all,

I have a client who would like to have VAT setup for mileage expense claims, such that only a proportion of the 45p/mile they pay Is vatable;

Mileage is paid for at 45p/mile for a 1600cc petrol car

Of that 13p is the contribution for fuel

Therefore VAT proportion is only 2.2p/mile.

The only ways I can think of doing this, are to either create a new VAT Code for mileage with a rate of 5.06%, or to do a VAT adjustment at the end of the period.

Is there a better way of doing this, as this being an HMRC requirement, it must have come up somewhere before?

Many thanks,

Will

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Ludwig Reinhard Microsoft Employee on at

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Hello Will,

Is this kind of VAT posting in line with the VAT regulations in your country?

I have not come across something similar and at least in my home country, this kind of calculated VAT might not be deductible.

For which country/region is that needed and is this a common business practice there?

Best regards,

Ludwig

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WPinkney 45 on at

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Hi Ludwig,

It is inline with VAT regulations in the UK - but most companies I've worked for/setup AX for either haven't claimed any VAT back on mileage, or have adjusted afterwards; this is the first time I've been on a project were (understandably) the client wants it done correctly in the system

The idea behind HMRC's rule, is that if it's a personal car, you can get paid 45p/mile for fuel and car maintenance - but only the fuel element is considered vatable. This is the 13p mile.

I've asked around, and nobody I know has done this before - like me they have just adjusted the VAT later. But thought I'd ask here.

Any advice appreciated.

KR,

Will

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Veronika Filonenko 1,261 on at

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Hello,

In Canada, I have worked on a project with pretty complex environmental and expense tax rules in general, where I had to set up some type of mileage expense rule based on the manager's level, distance and province within the country..

So of course you will need to create a separate code with the right % and separate item sale tax group at list. (screen shot 1)

I also created a matrix using in HR module - Employee - Expense tab - Mileage rates table

to help the user select the right line that applies to him when he is submitting this type of expense.

This is AX 2012, but I suggest for you to try to explore.. who knows maybe you will come up with something nice for you customer.

Hope this can give you some ideas.

This information is available in the expense report to be selected by <type>.

Good luck.

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WPinkney 45 on at

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Hi Veronika,

Thanks for the suggestion - I was hoping there would be a nicer way of doing this, but I think you're right, that setting the VAT rate to be 5.06% might be the only way of doing this.

Kind regards,

Will

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