Reclaiming VAT on business car

escortg3

We just bought a td6 landrover for my partners work. it had VAT on it. now we are told we cannot reclaim the VAT. we wouldnt have bought it had we known. is there any way to get round it and reclaim it.

He is VAT registered thats why we thought we could get it back.
He sometimes as a few workers with him to take to jobs on farms thats why that vehicle.

Help please.:)

TM1976

No. You can only claim the VAT back on a car if it's for a car leasing business.

If it was a van you could claim it back but not for a car.

John_Pierpoint

What about one of those pick up truck things with a "crew cab" taking 5 seats?

escortg3

John_Pierpoint wrote: »

What about one of those pick up truck things with a "crew cab" taking 5 seats?

the back seats are tiny and the men are big, and also he carries expensive kit round with him. was worried about kit being open in the back. grrrrrrrrrrrrrrrrrrr :mad:

he has another car for private use so really was just for business. how come they can add VAT to a vehicle that no one can claim back. it dont make sense

terryw

Simply because they are the rules set by the government!

RayWolfe

No, it's because people abuse the spirit of the act and suggest that they have just bought a top of the range Range Rover to carry a cement mixer to their building site. The rules are quite simple, if it has passenger seats with windows, it's a car. Been like that for ever.

JasonLVC

If the Landy TD6 is "wholly and exclusively" for business use then you are half way there to reclaiming the VAT. The other hurdle is "made available for personal use" which is the big stumbling block for most.

If the TD6 is locked up on the business premises at night and the keys are signed in/out by someone other than the Director(s) then there might be mileage in a reclaim. However, if this is a farm then the input tax will be near impossible to reclaim becuase I assume the TD6 is kept on the farm and the driver of the vehicle is the farmer who lives on the farm also and so there is absolutely no way you can prove to HMRC that the vehicle is "not available for private use" as the mere fact it sits outside the house is enough for it to be "available for private use"....even if it is never used for private use.

The fact the vehicle is unsuitable for transporting men due to the small seats would also suggest the vehicle has little 'business use' and weakens any argument for saying the vehicle had a practical use on the farm.

As for paying VAT you cannot reclaim, there are many purchases that are blocked in law such as business gifts, business entertaining and anything non-business use (ie, like a car you use for personal journies and therefore cannot be 'business' or a LCD screen for the conference room).

Your only options are to not reclaim the VAT (correct treatment) or reclaim the VAT and then hope to escape an inspection over the next 4 years. If you do get an inspection, HMRC will easily spot this one and will raise an assessment for the VAt you reclaimed in error, plus interest plus the potential for a penalty of 30% of the VAT reclaimed if they believe reasonable care was not taken in reclaiming the VAT in the first place.

escortg3

JasonLVC wrote: »

If the Landy TD6 is "wholly and exclusively" for business use then you are half way there to reclaiming the VAT. The other hurdle is "made available for personal use" which is the big stumbling block for most.

If the TD6 is locked up on the business premises at night and the keys are signed in/out by someone other than the Director(s) then there might be mileage in a reclaim. However, if this is a farm then the input tax will be near impossible to reclaim becuase I assume the TD6 is kept on the farm and the driver of the vehicle is the farmer who lives on the farm also and so there is absolutely no way you can prove to HMRC that the vehicle is "not available for private use" as the mere fact it sits outside the house is enough for it to be "available for private use"....even if it is never used for private use.

The fact the vehicle is unsuitable for transporting men due to the small seats would also suggest the vehicle has little 'business use' and weakens any argument for saying the vehicle had a practical use on the farm.

As for paying VAT you cannot reclaim, there are many purchases that are blocked in law such as business gifts, business entertaining and anything non-business use (ie, like a car you use for personal journies and therefore cannot be 'business' or a LCD screen for the conference room).

Your only options are to not reclaim the VAT (correct treatment) or reclaim the VAT and then hope to escape an inspection over the next 4 years. If you do get an inspection, HMRC will easily spot this one and will raise an assessment for the VAt you reclaimed in error, plus interest plus the potential for a penalty of 30% of the VAT reclaimed if they believe reasonable care was not taken in reclaiming the VAT in the first place.

Thanks for the replies:)

The vehicle is kept at a work shop miles from home and he is not a farmer. He is an agricultural contractor/engineer
He doesnt use it for business its not kept at home.

never mind eh. life goes on:)

JasonLVC

escortg3 wrote: »

Thanks for the replies:)

The vehicle is kept at a work shop miles from home and he is not a farmer. He is an agricultural contractor/engineer
He doesnt use it for business its not kept at home.

never mind eh. life goes on:)

If the vehicle is kept in a workshop miles from his home then there is an argument that vehicle is "not available for private use" by the fact it is locked up down the road (ie, bloke has to drive in his own car to workshop, gfets into TD6, goes to work, then comes back to workshop, swap cars and goes back home in own car). That possible but HMRC would still want to see some restriction on use of the TD6 such as the keys being signed in/out on each use or employment contract that states private use of vehicle is prohibited - but difficult to do if you are a sole trader/one man band business.

You state he "doesn't use it for business". What does that mean exactly? If you buy a TD6 it is either used wholly and exclusively for business meaning you can reclaim the VAT or it isn't used for business and therefore must be private and so no VAT recovery.

From a technical point, the right to deduct (reclaim) input tax on ANYTHING is on the basis it is used wholly and exclusively for a business purpose, HMRC ignore stuff like laptops/mobile phones due to the low values involved, but for a car, especiially an expense one like a LandRover, HMRC will not expect the VAT to be reclaimed unless 100% of the vehicle is for a sole business use.

escortg3

JasonLVC wrote: »

If the vehicle is kept in a workshop miles from his home then there is an argument that vehicle is "not available for private use" by the fact it is locked up down the road (ie, bloke has to drive in his own car to workshop, gfets into TD6, goes to work, then comes back to workshop, swap cars and goes back home in own car). That possible but HMRC would still want to see some restriction on use of the TD6 such as the keys being signed in/out on each use or employment contract that states private use of vehicle is prohibited - but difficult to do if you are a sole trader/one man band business.

You state he "doesn't use it for business". What does that mean exactly? If you buy a TD6 it is either used wholly and exclusively for business meaning you can reclaim the VAT or it isn't used for business and therefore must be private and so no VAT recovery.

From a technical point, the right to deduct (reclaim) input tax on ANYTHING is on the basis it is used wholly and exclusively for a business purpose, HMRC ignore stuff like laptops/mobile phones due to the low values involved, but for a car, especiially an expense one like a LandRover, HMRC will not expect the VAT to be reclaimed unless 100% of the vehicle is for a sole business use.

Sorry i meant it was used for business only and not private use. he has just got of the phone to tax office and his accountants and they have said it is ok to reclaim the VAT Whooooopeeeeeee:T They said because he owns another vehicle and i have mine and as you said its kept at the workshop it was ok.:)