Commentary

BB/22C/05 Recovery of VAT by businesses on road fuel purchased by their employees on their behalf

Part V16 Forms and other HMRC material

BB/22C/05 Recovery of VAT by businesses on road fuel purchased by their employees on their behalf

BB/22C/05 Recovery of VAT by businesses on road fuel purchased by their employees on their behalf

Business Brief, Issue 22. 1 December 2005

This Business Brief explains the new arrangements for recovery of VAT on road fuel purchased by employees. They are being introduced as a result of the judgment of the European Court (Case-33/03) in the infraction proceedings against the United Kingdom, which was issued in March 2005. The new rules come into effect from the 1 January 2006.

Background

There are several ways in which employees can purchase road fuel for use in their employers' businesses. They can use fuel cards or credit or debit cards provided by their employers, they can charge the cost to an account operated by their employers at the filling station, or they can pay for the fuel themselves and then be reimbursed by their employers. The infraction proceedings concerned only the last situation, where employees purchase the fuel themselves and are reimbursed.

Up to now, recovery of VAT where

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