Employers can claim back VAT from mileage claims

HMRC operates a simplification measure that allows businesses to claim back VAT from mileage claims using a standardised scale charge to value fuel costs for private use. The scale charge is a fixed amount based on a vehicles CO2 rating.

Most businesses, particularly small and medium sized businesses, which do not keep detailed mileage records covering all journeys, use the road fuel scale charges scheme. This measure saves business car users the chore of keeping detailed records of actual private mileage.

Where the scale charge is used, a business can reclaim all the VAT incurred and then pay the appropriate fuel scale charge for each vehicle. The charge is calculated on a flat rate basis according to the carbon dioxide emissions of the car.

The VAT road fuel scale charges are updated annually. The latest valuation table sets the VAT scale charges for taxing private use of road fuel from 1 May 2018 to 30 April 2019. The new fuel scale charges must be used by companies from the start of their next prescribed accounting period beginning on or after 1 May 2018. The fuel scale rates encourage the use of cars with low CO2 emissions.

Planning note:

If a vehicle is used only for business use, all the VAT on fuel costs can be recovered. HMRC will expect to see proof that there is no private use of the vehicle in question.

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Advance assurance for R&D tax claims

Advance Assurance for small companies that claim Research and Development (R&D) tax relief was introduced in November 2015. This measure makes it easier for small businesses investing in research and development to claim tax relief.

Advance Assurance is available to companies who haven’t claimed R&D before, have an annual turnover of less than

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09
May

Are you making money from a hobby?

The ‘badges of trade’ tests whilst not conclusive are used by HMRC to help determine whether an activity is a proper economic / business activity or merely a money-making side line to a hobby. However, there is a point where careful consideration needs to be given to deciding whether your hobby has in fact become a taxable trading activity.

It is clear from the significant amount of case law on this subject that a decision on whether there is a business activity is often not black and white. In fact, both HMRC and the courts are clear that it is important to look at the whole picture rather than looking at each ‘badge’ in isolation or even relying too heavily on the badges of trade at all. In some cases, taxpayers will seek to argue that their hobby is actually a trade in order to benefit from certain tax reliefs, usually related to having a trading loss.

HMRC will consider the following nine badges of trade as part of their overall investigation as to whether a hobby is actually a trade.

  • Profit-seeking motive
  • The number of transactions
  • The nature of the asset
  • Existence of similar trading transactions or interests
  • Changes to the asset
  • The way the sale was carried out
  • The source of finance
  • Interval of time between purchase and sale
  • Method of acquisition

Planning notes:

The introduction of the trading allowance from April 2017 can help taxpayers making small amounts of money from their hobby. Even if HMRC consider that the activities in question are a trade, taxpayers can make up to

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