HM Revenue and Customs Brief 11/12
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Issued 25 April 2012
VAT: Road Fuel Scale Charges (RFSCS) - legislating VAT Extra
Statutory Concessions (ESCS) and possible claims for overpaid VAT
HM Revenue & Customs (HMRC) operates a system of Road
Fuel Scale Charges (RFSCs) to help businesses account for VAT when
business road fuel is put to private use. This is a simplification
measure that allows businesses to use a standardised scale charge to
value private use fuel. Otherwise businesses would need to keep other
records such as detailed records of private mileage.
Following the announcement in the Budget that the Government
would be consulting on amendments to the legislation on the RFSC, HMRC
has issued a Technical Note on the planned changes, this is available
by following the link below.
note - VAT: Road Fuel Scale Charges - changing UK law to comply with EU
law and streamlining the scheme
The changes to RFSC outlined in the Technical Note aim to
maintain the overall benefits of the RFSC system. The changes will:
- bring into legislation the effect of two existing extra
- simplify the legislation and the process for the annual
revalorisation of the scale charges
- withdraw one extra statutory concession
- correct a defect in the existing legislation
2. Who needs to read this?
VAT-registered businesses that use road fuel scale charge to
account for VAT on fuel which has been acquired through their business
but then used for private purposes.
3. Impact of the defect in existing RFSC legislation
Under existing law, where a business has provided fuel to an
employee for their private use and has made a charge for that fuel,
they are required to account for VAT on the basis of the RFSC, unless
they have accounted for VAT on the basis of detailed records of private
mileage or the charge made was at least for the cost of the fuel. HMRC
now recognises that there is a defect in this aspect of current law and
that, where the business does make a charge for the private use of the
fuel, the business should be given the option of accounting for VAT on
the basis of the amount charged to the employee.
Businesses making a charge for private use of fuel may, until
the defect has been corrected, account for VAT on this basis in future
returns. Any businesses who consider that they have overpaid VAT as a
result of this defect may submit a claim for repayment of the
difference between the amount already accounted for and the amount due
on the basis of the charge to the employee. All claims which are
submitted to HMRC must be supported by proper evidence and are subject
to the normal rules for claims. Further guidance on making claims can
be found in Public Notice 700/45 How to correct VAT errors and make
adjustments or claims.
About the Author
© Crown Copyright 2012.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2012-05-03 14:08:33 in Tax Articles