Amendment to EU Decision 2021/512: Renewal of Derogation for Fuel VAT Rates in Northern Ireland

• The UK has requested a renewal of the existing derogation from Articles 16 and 168 of Directive 2006/112/EC in respect of Northern Ireland.
• This derogation allows for a simplification measure that permits businesses to apply a flat rate when accounting for VAT on fuel used for private journeys in company vehicles.
• The UK has been operating this simplification since 1986, initially calculating the flat rate private use charge based on engine capacity and fuel type, and later based on CO2 emission rating.
• EU legislation allows for special measures to derogate from the VAT Directive to simplify tax procedures or prevent tax evasion or avoidance.
• A further grant of a derogation is needed to continue applying a flat-rate charge in Northern Ireland.
• In 2021, the EU authorized the UK to continue with its derogation until 31 December 2023.
• The derogation allows businesses to deduct VAT incurred on fuel in full and pay a flat rate charge for private use, simplifying accounting by eliminating the need for full mileage records.

Source: gov.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---