When trying to recover fuel costs for a car used for both business and private purposes, which option should a business consider?

To recover fuel costs for a car that is used for both business and private purposes, a business should consider reclaiming all fuel and offsetting the claim using a fuel scale charge. This approach is correct because it allows the business to claim VAT on total fuel expenses incurred while acknowledging the portion used for private purposes.

The fuel scale charge is a mechanism that helps to simplify VAT accounting in mixed-use situations. It provides a method to calculate the non-business use of fuel based on a set scale, enabling the business to reclaim VAT on the fuel costs proportionate to business use without needing to track every individual trip meticulously.

In contrast, other options do not provide the same comprehensive recovery of costs or may lead to complications. For instance, agreeing not to reclaim any input VAT on fuel could result in a loss of potential savings. Using average fuel costs could be imprecise and might not truly reflect the business-related usage unless adequately tracked. Limiting fuel recovery to only business-related journeys could also leave the business at a disadvantage since it would not reclaim VAT on fuel used for business purposes, even if some of that fuel is used for journeys partially related to business activities. Therefore, the chosen option of reclaiming all fuel and starting from that baseline for business trips