VAT question - any bookeepers/accountants who can answer this?

[mycatoscar]

I am doing basic books for my husband's building business and we have just had to register for VAT

When he buys petrol he often buys a bottle of coke or a chocolat bar at the same time. He is a builder and often on the road getting materials or travelling between jobs.

When I put this through his books, does the food and drink count as a business expense and can we reclaim VAT on it? I have tried to get him not to do this as I am worried we can't reclaim and this will make the bookkeeping complicated. He is convinced he can claim for them as business expenses.

Yes these are a legitimate business expense, they would be classed as subsistence.

The one thing to be careful with is that most food does not have vat on it, although pre-prepared/processed food usually does, so make sure you check the vat breakdown at the bottom of the receipt.

Thanks baabaa, it's mainly bottles of coke and confectionary and he does always get a receipt with vat on it.

So long as you have the VAT receipt you should be OK

remember that any work he does on New Builds is zero rated, but you can still reclaim the VAT on costs :-)

Ah yes had forgotten about new builds, will keep that in mind.

Note that now he is over the VAT threshold he cannot use the fixed mileage rate for recovering mileage on any new vehicle (he must carry on using it for his current vehicle though).

He can however buy a van or pickup for the business and reclaim the VAT.

It is probably time to get an accountant.

I'd look into the subsistence thing a bit more.

If he is an employee of his own limited company then he is liable for income tax on it as a perk. Companies are allowed tonprovidectea and coffee for employees or food & drink for hospitality but that us all. There is a daily allowance you can claim against if working away/stopping overnight for breakfast & evening meal only

If you have a vat inspection they will likely kick the vat on choc bars etc out. It's happened to my parents company (also construction industry).

Thanks mums betters. He is a sole trader, not limited. And yes we have an accountant to do tax returns, I just keep sales/ expenses records and do cis returns and secretarial stuff.

One solution to this that helps cash flow as well is to get a petrol card which you pay off monthly. These are usually limited to paying for fuel and oil.
As I say the benefit is you get 30 days credit on the fuel. My business has them for Sainsburys for pump prices get nectar points too and BP for bunker fuel prices (cheaper than pump) no points.
You then get big VAT invoice at the end of the month.