While VAT on the acquisition of a new car is generally not recoverable, what happens to the VAT on petrol and maintenance costs?  

By concession, provided that a car is owned by business and used for some business purposes, the VAT on the full cost of any repair and maintenance costs is reclaimable, even if the car is also partly used for private purposes. VAT on fuel used for business purposes is reclaimable even if the fuel is paid for by an employee who is then reimbursed, either through a mileage allowance or by repayment of the cost of the fuel. If a business provides its employees with petrol for private use, and the employee does not fully reimburse the company for the cost of the fuel, the business is considered to have made a taxable supply of that fuel to the employee. VAT car fuel scale charge tables can be accessed from www.hmrs.gov.ukto show how this output tax should be charged. However, if the business chooses not to try to reclaim the input tax on the fuel they do not have to account for this special output tax. If an employee reimburses an employer for the cost of either the use of the car or any private fuel used, then the payment is treated as if it were VAT inclusive provided that the payment is equal to or exceeds the cost of the private fuel.