VAT on items purchased via a company for employees - both personal and company use

Lisa1978

I work in a Ltd company and have employees asking if they can purchase tools (which they will pay for themselves) but they will be using them both personally and for our business use. The invoices will be made out to the company name and be invoiced with VAT. 

What is the VAT rules on this? The company will be able to claim back the VAT in full so do we pass on this benefit to the employees and they only pay NETT or does this create BIK issues? 
Thanks 

DE_612183

Are they being paid for out of a business bank account?

If not - how do you account for the transactions?

Normally things have to be "wholly for business use" to be classed as a business expense.

Lisa1978

DE_612183 said:

Are they being paid for out of a business bank account?

If not - how do you account for the transactions?

Normally things have to be "wholly for business use" to be classed as a business expense.

Yes they will be paid for by the business out of the business bank account 

theoretica

Sounds a little like the Cycle to Work scheme - where I believe VAT is due.

uknick

You can't claim back input VAT on non business purchases but you can claim back the portion that is.  How much of the use of the tools is business and how much personal?  

Read about it here;

Charge, reclaim and record VAT: Reclaim VAT on business expenses - GOV.UK (www.gov.uk)

Regarding BIK issues, if the employee pays for the personal use of the tools and the reclaimable VAT there shouldn't be any.

It may well be a messy and admin heavy system to maintain correctly.  What value tools are we talking about?   

Lisa1978

uknick said:

You can't claim back input VAT on non business purchases but you can claim back the portion that is.  How much of the use of the tools is business and how much personal?  

Read about it here;

Charge, reclaim and record VAT: Reclaim VAT on business expenses - GOV.UK (www.gov.uk)

Regarding BIK issues, if the employee pays for the personal use of the tools and the reclaimable VAT there shouldn't be any.

It may well be a messy and admin heavy system to maintain correctly.  What value tools are we talking about?   

Hi it could be anywhere from £10 to £200. 

Lisa1978

So although we pay the VAT to the tool supplier, we shouldn't claim it from HMRC if the items are for personal use or at least only claim a % based on the personal v business use? And the employee should pay Nett not Gross? 

superbigal

If you are selling to an employee then your invoice should charge them VAT.