My apologies, if this questions is already been asked and answered. I tried searching the forum but couldn't find the right answer. So I would appreciate if someone could answer this.

I am registered for flat VAT scheme. I do lot of traveling and I pay for the fuel from my pocket and then get reimbursed from the company account. Now when I record the Money paid out transaction for reimbursement, I record this transaction with VAT as 0%

Example
Business Miles – 1000 miles
Rate 45p
Total payable = £450

So in Solar account, money paid out transaction from Bank account to me £450 with VAT 0%

Is that correct or do I have to split this 45p into two parts, one for fuel with 0% VAT and other for wear and tear allowance with 15% VAT?

Hi Sachin,

Ideally you should split the payment into two parts as described here:
http://www.solaraccounts.co.uk/help/how-to-record-mileage-allowance-payments.php
(Note: the VAT rate on the fuel should now be 20% not 15%, while the non-fuel component should be 0%)

However, because you are on the Flat Rate Scheme you cannot recover the VAT you pay on purchases. Therefore recording the VAT on fuel will have no affect on your profit - it will only make the 'Gain (or Loss) Due to Flat Rate VAT' figure slightly more accurate.

Regards,

Thanks for your prompt response...