My client's van is used 75% business and 25% private. I know I should split expenses 75% business and 25% private but there's lots of small value expenses and to save time I'm going to allocate them all to motor expenses and in the annual account apportion 25% of the total to non-business. That's OK for income tax but not OK for VAT which I'll have to deal with as I go along. My client used to use a spreadsheet that correctly claimed only 75% of the VAT. What's the best way to deal with this in QBO?
I'm thinking of creating a new VAT code eg VAN and giving it a VAT rate of 14.285% (being 15/105) because 14.285%/114.285% gives the correct result eg £100 of fuel x 14.285%/114.285% = £12.50 which is the VAT content in £100 is £16.67 x 75% business use = £12.50.
