What is the flat-rate basis for VAT on private fuel use under VATA 1994 Schedule 6?

The flat-rate basis is a simplified method allowing VAT-registered businesses to account for output VAT on road fuel provided for private use. Instead of tracking actual private mileage and fuel costs, businesses look up a flat-rate value from a Treasury-approved valuation table published by HMRC for each individual and each car.

When is private use of road fuel treated as a deemed supply for VAT purposes?

Private use of road fuel is treated as a deemed supply of goods when a VAT-registered business purchases fuel for business use and some is used privately. This applies to fuel provided to employees for private use by reason of employment, fuel used privately by a sole trader, or fuel provided to individual partners in a partnership.

How is the flat-rate valuation table for fuel scale charges maintained and updated?

The Treasury makes an order establishing the base valuation table. HMRC must regularly revalue the amounts in accordance with that order, producing updated tables that replace previous ones. Any updated valuation table must be published before it takes effect, accompanied by a statement confirming the date from which it applies.

How does a business apply the flat-rate basis to company car fuel in practice?

The business looks up the current HMRC flat-rate valuation table for each employee's company car, typically based on CO2 emissions band and accounting period length. The table provides a VAT-inclusive value treated as the deemed supply amount. The business then accounts for output VAT on that figure for each car and each employee.

Value Added Tax Act 1994 section A1-B1

Option for valuation on flat-rate basis

Section A1-B1 of Schedule 6 deals with the option for businesses to use a simplified flat-rate method to account for VAT on road fuel provided for private use by employees, sole traders or partners.

When a business provides road fuel for private use by employees, sole traders or partners, this is treated as a supply of goods and VAT must be accounted for on it.
The business can opt to value all such fuel supplies in an accounting period using a flat-rate basis, rather than calculating the actual cost of private fuel use.
The flat-rate value for each individual and each car is set by reference to a valuation table established by Treasury order, which is regularly updated by HMRC.
HMRC must publish any updated valuation table before it takes effect, together with a statement of its commencement date.

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