Claiming VAT back on business use car

Lifeisbutadream

I run a small joinery/building business with OH and we have a business van and a have just bought a second hand car.

80% of the cars use goes through the business (it is a sign-written car, used for pricing, site-visits, collecting materials etc. as well as family outings)

I have no problem with sorting out claiming against income tax - the accountant does that, but I do the VAT and have read mixed reports about whether I can claim VAT back on the car? I thought that we would be able to claim 80% of the VAT back, but have read that you cant claim on cars, only vans? is this true? if so, why? thank you in anticipation...

Lifeisbutadream

As far as I am aware I was charged VAT - I have a VAT receipt - the car is 7 months old.

Thanks for your help. The car went through the VAT in January, so I will have to sort it out on my VAT return for next time.

Lifeisbutadream

What about finance? we financed part of the car and are obvioulsy paying VAT on that also?

JasonLVC

It is possible to reclaim the VAT on a purchased car if you can demonstrate that it is not 'available for private use' as Lg states. So as soon as the car goes on the driveway at home or you nip to Asda to get a sarnie it is private use. Very difficult to prove non-private use unless car is kept elsewhere overnight, keys are kept locked/signed out and in with mileage logs that tally back to milometer, etc. As a small business with only one Director/Co. Sec you'll never get this past HMRC in a million years.

The adverts on the side are irrelevant (the tribunals have had business men buy Ferrari's and stick a logo on the doors in an attempt to save £20k of VAT - but no such luck!)

You can only recover VAT if the expenditure relates wholly to a business activity and there is no scope for apportionment on cars, so clearly a car being used 80% of the time is not going to be compliant.

The VAT on the finance relates to the purchase of a car (in effect you are buying a car over a period of months) - but the reality is it is still a car, purchased so no VAT recovery I'm afraid.

It is possible that the dealer may have charged you VAT in error or that they are not eligble for the second hand car scheme. Second hand car scheme is too complicated to explain here but as LG states, you'd not normally expect to see VAT on a second hand car - so may be worth reading up here and asking dealer to double check :-

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000145&propertyType=document

Section 19 - and if you survive that section then good on you!.

Lifeisbutadream

Thanks - I will re-check the invoice!

ahhh what would I do without this site?? -

*goes off to update accounts books*