VAT payment for write-off?

Bluefairy

Hi there:wave:

Can anyone help with a VAT back insurance question please?

I had an accident and my car was declared a write-off. The insurance company I am with have been horrendous to say the very least. I have had to do all the calls, all the chasers, all the paperwork throughout the whole situation for the past 2 months. The original offer they gave me was circa 7k plus the VAT making it circa 8k. That was fine so I settled for that. After weeks, still nothing so I chased and now they are saying they never pay the VAT and that they never agreed that with me!:mad:

Needless to say, I explained that was what they told me and what I agreed to. I am a VAT registered company (self employed) and obviously when I would have come to sell the car I would included VAT in my sale price and effectively I am selling to them so therefore the price should include VAT. Is that correct? Can anyone please advise?

Many thanks:)

TSx

When you buy a new vehicle will you be able to reclaim the VAT?

paddedjohn

isnt vat only payable on commercial vehicles? ie vans/trucks

newbutold

paddedjohn wrote: »

isnt vat only payable on commercial vehicles? ie vans/trucks

If only that was true

VAT is payable on private vehicles also.

Quentin

Bluefairy wrote: »

The original offer they gave me was circa 7k plus the VAT making it circa 8k.......

You must have misunderstood the offer.

Unless your car was a taxi, you don't charge VAT when you sell it.

(Nor can you reclaim VAT when you buy it).

If they offered £8000 and you only got £7000 (assuming the excess doesn't account for the difference), then you should complain and escalate till you are satisfied, but your VAT issue is a non starter!

vaio

You've misunderstood the VAT rules.

You can reclaim the VAT on any car used "exclusively" for business purposes

The taxi/school of motoring/hire car rule allows you to get the VAT back on cars that aren't used "exclusively", they only have to be used "mostly"

Quentin

vaio wrote: »

You've misunderstood the VAT rules.

You can reclaim the VAT on any car used "exclusively" for business purposes....

No, you have misunderstood completely.

A (vat registered) business cannot reclaim VAT on a car purchase! (Only on its maintenance etc.)

vaio

Quentin wrote: »

No, you have misunderstood completely.

A (vat registered) business cannot reclaim VAT on a car purchase! (Only on its maintenance etc.)

Nonsense, the rules are as I stated above

www.hmrc.gov.uk/vat/managing/reclaiming/motoring.htm

Reclaiming VAT when you buy a car

Generally you can't reclaim the VAT when you buy, import, or in some other way acquire a car. But there are some exceptions to this. You can reclaim all of the VAT if you meet one of these conditions:

• The car will be used exclusively for business purposes and you can show that it's not available for private use by your employees or anyone else. For example, your employees' contract of employment excludes private use including travel from home to the place of work.
• You intend to use the car mainly as a taxi, a driving school car or a self-drive hire car.

Quentin

As far as the OP is concerned, this was covered when pointed out to him that VAT was only recoverable for a "taxi", as were the case that the car was solely for business use that covered the issue!

(Were this car solely covered for business, the OP would already have got his VAT back!)

The answer he was given is correct, the argument he should be having is over the valuation of his car, not the VAT element, which is irrelevant.

vaio

Quentin wrote: »

As far as the OP is concerned, this was covered when pointed out to him that VAT was only recoverable for a "taxi", as were the case that the car was solely for business use that covered the issue!

(Were this car solely covered for business, the OP would already have got his VAT back!)

The answer he was given is correct, the argument he should be having is over the valuation of his car, not the VAT element, which is irrelevant.

Right, having established that, contrary to your earlier pronouncement, VAT is reclaimable on certain classes of cars we then need to move on to what happens when such a car is disposed of.

If the VAT is reclaimed on on acquisition of the vehicle then it seems logical to me that VAT must be accounted for on disposal which, if I'm right, means that about 17% of any payout to the OP must be handed over to HMRC, not what I'd call irrelevant.

OP......The VAT position on acquisition & disposal of qualifying cars is schoolboy stuff and, assuming you reclaimed the VAT when you bought it then you have to account for the VAT when you dispose so I'm inclined to agree with you that any payout should be £x + VAT.

But, I'd also be tempted to give HMRC a ring to double check as it's not unknown for logic & HRMC rules to be different.

Quentin

If the OP's company car qualified for the VAT to be reclaimed, and is still owned by the business, and never used outside the business, then it is correct that the insurer is paying the value of the car net of the VAT!

(Insurers always treat the VAT element of a claim like this (ie they don't pay it) when dealing with claims from VAT registered policy holders, who are not disadvantaged by this)