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A defect in the rules covering the road fuel scale charges scheme is to be corrected, following the announcement of moves to amend legislation.
The department operates the charges to help firms account for VAT when business road fuel is put to private use. The aim is to prevent the need for detailed records such as those of private mileage.
Last month’s Budget included a plan to change the system to legislate the effect of two extra-statutory concessions and withdraw another, and simplify the set of laws.
And a flaw will be corrected: currently, where a business has provided fuel to an employee for private use and has made a charge for it, accounting for VAT on the basis of the scheme is necessary unless the firm has accounted for the tax on the basis of detailed records of private mileage or the charge made was at least the cost of the fuel.
The Revenue has recognised the error in this aspect of the law and noted that, where the business makes a charge for private use, there should be the option of accounting for VAT on the basis of the amount charged to the employee.
Organisations making a charge for private use of fuel may account for VAT on this basis in future returns, until the error has been rectified.
A business that may have overpaid VAT as a result of the defect is permitted to submit a claim for repayment of the difference between the amount accounted for and the amount due on the basis of the charge to the employee.
