VAT - Section C - Garfield (Mar/June 16) Revision Kit

FFiddah8y ago

Hello sir, I have a doubt in the following part of the question: Motor expenses The motor car purchased on 1 January 2018 is used by Garfield 60% for business mileage. During the quarter ended 31 March 2018, Garfield spent £1,008 on repairs to the motor car and £660 on fuel for both his business and private mileage. Both of these figures are inclusive of VAT. Answer: Motor expenses = (1668 (1008+ 660)) x (20/120) = £278 What I don't understand is Why haven't they apportioned the fuel cost as 660*60%? Since only 60% relates to business mileage. Many thanks in advance!

TTTax Tutor7y ago#1

I do not have a "Revision Kit" to see the question but I assume it asks you to compute the recoverable input tax. If you look in the OT notes or indeed any recommended text you will see that input tax is recoverable on all fuel costs for both business and private mileage and there is then an output tax charge raised according to the fuel scale charge (OT notes chapter 25 p.153 section 4 motor expenses)

FFiddah7y ago#2

Yes it does ask about computing the recoverable input tax. Thank you for giving me the exact page to look into the notes! Will have to look into that. But even before that, i have understood thanks to you comprehensive explanation. Thanks a lot, sir!