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Legislative framework for recovery of VAT on reimbursements of fuel

Since 1 January 2006, regulations (namely SI 2005/3290)¹ made under VATA 1994, s 24(6)(a) provide for the recovery of input tax by a taxable person in respect of road fuel supplied to a taxable person (the employer) but delivered to, and paid for, by an employee who acts in the name and on behalf of the employer (the taxable person)².

The introduction of these regulations was accompanied by Business Brief 22/05 and Information Sheet 8/05. HMRC guidance is primarily contained within VIT55400 and Notice 700/64, section 9.

Quantifying input tax on reimbursements of fuel

The amount of input tax is quantified by reference to the amount reimbursed to the employee³, ie:

1. Ìý

   •ÌýÌýÌýÌý where all of the fuel is used for the purposes of the taxable person's business, the actual cost of the fuel⁴

2. Ìý

   •