VAT – Changes to Road fuel Scale Charges (RFSC)

HMRC announced yesterday that later this year, they intend to make changes to the current VAT legislation relating to road fuel scale charges as current practice is incompatible with EU law.

Under existing UK 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 covered the full 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.

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