As a sole trader without a business vehicle, I need to use my own car for business purposes. I am using the following steps to record journal entries for each trip I make for my business. In this example say I have travelled 100 miles for the business:
- Add two lines with the same account category (motor expense)
Enter the descriptions as “Mileage-fuel element” and “Mileage-non fuel element”
Put the fuel element amount in the first line – 14p x 100 = (based on HMRC guidelines)
Put the non-fuel element amount in the second line – (45p – 14p) x 100 = £31 (using HMRC guidelines)
- Use the Owner Contributions as the payment account for the full amount of £44
The above seems to work but I need to add the VAT reclaimable amount on the fuel element that HMRC allows. Do I need to split the £14 into two entries in the journal one for the fuel element before VAT (11.7p) and one for the VAT on £14 (2.3p)? If I do 10,000 miles for business it will add up to a sizeable input VAT so I need to make sure I am entering the details correctly and nowhere have I been able to find how to add this properly using journal entries.
Hopefully you won't tell me I need to speak to my accountant as this is merely a question of how does QB handle this process of deducting VAT when it is not part of a pre defined set of rules you can just apply to the downloaded bank statments all the time. You have a way of capturing all the mileage linked to your mobile phone. Now just explain how to get it into the books. I think I have 90% of it correct but it is just the VAT allocation - possibly needing the VAT control account to be tied in here.
