TaxCorporate TaxHMRC admits error on private fuel VAT

HMRC admits error on private fuel VAT

HM Revenue & Customs confirms current legislation is in breach of EU law and must be changed

HM REVENUE & CUSTOMS has admitted it made a mistake in its approach to charging business VAT on some of the private fuel made available for private use, reports Taxationweb.

This, HMRC said, breaches EU law and could mean some businesses are overpaying VAT and the rules therefore must be changed.

Previously, HMRC has had businesses account for VAT at least to the extent of the road fuel scale charge in the absence of detailed mileage records to establish accurate liability, even when the company has charged a lower amount for the fuel available for private use. This has caused some businesses to pay more VAT than the element that would match with their actual charge for private use.

However, in a technical note issued yesterday, HMRC confirmed the current legislation contravenes the EU’s principal VAT directive.

It said: “A deemed supply cannot be imposed where consideration is paid. Under the provisions of the principal VAT directive, where a real supply exists no deemed supply can be imposed. Consequently, UK law is wrong to impose RFSCs where a tax payer makes a real charge for road fuel but that charge is less than cost price.”

These changes, however, will not apply where businesses have not charged for private fuel use.

Related Articles

Watch out when winding up

Corporate Tax Watch out when winding up

1m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

4m Emma Smith, Managing Editor
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

8m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

10m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

11m Emma Smith, Managing Editor
Spring Budget 2017: Making Tax Digital

Business Regulation Spring Budget 2017: Making Tax Digital

1y Shereen Ali, Deputy Editor
Tax fraud loses HMRC £16bn

Corporate Tax Tax fraud loses HMRC £16bn

1y Emma Smith, Managing Editor
HMRC nets £2.6bn in corporate tax from big businesses

Corporate Tax HMRC nets £2.6bn in corporate tax from big businesses

1y Accountancy Age editorial