Paying VAT when someone else crashes my car

bobz223

Hi there so about 6months ago my car was parked outside my house a truck driver damaged it doors was completely gone on the right side the car was insured at a family business as it was cheaper to do that due to my location anyways now I have recived a letter to pay VAT which is around £1000 pounds on the car repair cost why do I have to pay this if I the accident was not my fault car was safely parked on the street unoccupied. Damage was fixing 2 doors. If I pay 1k it might aswell been me crashing my own car. When the accident happened the driver said he would deal with it I guess it was better for me to sort it out myself . Anyways is there anyways to not have to pay this because paying 1k is like what’s the point of insurance at this point if I have to pay the bill of someone else crashing my car thanks any help is appreciated 

Petriix

Sentences and paragraphs are your friends...

From what I can decipher from your post you are facing a bill for VAT on the repair of your car which was damaged by a third party. I assume that the third party admitted fault and has paid you already an agreed amount for the repair, but that their payment has not accounted for the VAT; is that correct?

Normally you would expect the third party to put you back in the position you were before the accident and any payments would be handled by their insurers. You might involve your own insurers or instruct a solicitor to act on your behalf. Did you do this?

If you've accepted a final settlement for your claim then I doubt you can reopen it to claim more. However, if it's been paid directly by the third party then you could potentially take them to court for the difference.

If you provide some actual details then we might be able to help.

comeandgo

Is this something to do with the fact a business paid the insurance ?  The VAT charge the business could claim back on its VAT returns if the vehicle was in fact a business asset but it seems it was not.  

Aretnap

bobz223 said:

Hi there so about 6months ago my car was parked outside my house a truck driver damaged it doors was completely gone on the right side the car was insured at a family business as it was cheaper to do that due to my location anyways now I have recived a letter to pay VAT which is around £1000 pounds on the car repair cost why do I have to pay this if I the accident was not my fault car was safely parked on the street unoccupied. Damage was fixing 2 doors. If I pay 1k it might aswell been me crashing my own car. When the accident happened the driver said he would deal with it I guess it was better for me to sort it out myself . Anyways is there anyways to not have to pay this because paying 1k is like what’s the point of insurance at this point if I have to pay the bill of someone else crashing my car thanks any help is appreciated 

You're going to need to rearrange those words into a coherent story before we can offer much help...

Specifically;

(1) Who is asking you to pay the VAT bill?

(2) Who arranged the repairs? Your own insurer, the truck driver's insurer, the truck driver himself, or some dodgy geezer who is a friend of the truck driver?

(3) Is it a car owned by a company, or are you self-employed and use it for your work, or is there some other way that you would be able to reclaim the VAT on its repairs?

(4) Are you saying that you lied to your insurance company about where the car is kept in order to get a cheaper premium? Actually, probably better not to answer this, but if you did then you can't really expect your own insurer to be much help in the circumstances.

Aretnap

comeandgo said:

Is this something to do with the fact a business paid the insurance ?  The VAT charge the business could claim back on its VAT returns if the vehicle was in fact a business asset but it seems it was not.  

This sounds plausible. If the car is a business asset then the VAT would not normally be covered by an insurance settlement, as it's money that you could reclaim from HMRC anyway. Whereas if you just pretended that it was a business asset in order to get a cheaper insurance premium and then found yourself with a VAT bill that isn't covered... well I guess karma's a b*tch.

Grumpy_chap

If the business paid the insurance, and the business is VAT-registered, then the insurance payout will not cover VAT as that can be reclaimed by the business as any input-VAT can be reclaimed.

AdrianC

Grumpy_chap said:

If the business paid the insurance, and the business is VAT-registered, then the insurance payout will not cover VAT as that can be reclaimed by the business as any input-VAT can be reclaimed.

Yup, this.

Can't have it both ways.
You can't put your insurance through the business books and then look surprised when the insurer assume it's a business transaction.

Oh, and if the VAT was £1k, then the full bill would have been £6k. But, since you run a VAT-reg business, you know this, right?

(Or was the insurance going through the business just a tax scam...?)

Grumpy_chap

I assume as well, the insurance going through the business was properly treated as BIK?  OR is the whole car a company car and subject to full BIK on the company car?

MinuteNoodles

bobz223 said:

the car was insured at a family business as it was cheaper to do that due to my location anyways now I have recived a letter to pay VAT which is around £1000 pounds on the car repair cost why do I have to pay this if I the accident was not my fault

So first of all you're committing insurance fraud. Secondly you have to pay VAT because you've got it on business insurance of a VAT registered company and as they'd be able to reclaim any VAT they spent then to put them in the same position as before the accident they only need to be compensated the ex-VAT amount. 
Looks like your insurance fraud you did is about to bite you in the !!!!!!. If you complain to the insurance company they'll instantly recognise what has gone on and likely cancel the business policy and any future insurance for that business will be eye watering when they have to declare they had a policy cancelled due to fraud.

MinuteNoodles

Grumpy_chap said:

I assume as well, the insurance going through the business was properly treated as BIK?  OR is the whole car a company car and subject to full BIK on the company car?

I love your optimism. I bet the tax man knows as much about this as the insurance company do about it being a private individual's own car nothing to do with the business.