Can I reclaim VAT on vehicle purchase if I'm on VAT FRS?

Can I reclaim VAT if on FRS?

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I have started doing a lot more mileage this past 2 years, and the time has come to buy a new car.  I would like to enter into a company Contract Purchase, and the dealers tell me I can reclaim the VAT plus other tax advantages.  However, as I'm on the VAT Flat Rate Scheme, I don't believe this is true.

Can someone please provide a simple answer.

Replies (5)

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By Malcolm McFarlin
18th Aug 2016 13:03

Correct, you cannot claim VAT on your business purchases, you have described. The only exception is for capital items costing over £2,000.00 [VAT inclusive] such as a computer or a van.

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By claudialowe
18th Aug 2016 13:12

You, or your accountant, need to crunch the figures, and see if you would be "better off" outside the FRS and on standard or cash accounting.

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By Panamera
18th Aug 2016 13:16

Just to clarify a couple of points on Malcolm's excellent response, which are implied, but not stated.

Under FRS you can only claim input VAT on capital GOODS costing over £2,000. Leasing is a service.

Even if you were not under FRS, you could not claim ANY of the input VAT on the purchase of a car and could only claim 50% of the VAT on car leasing, except in some very specific circumstances.

As a general rule of thumb, car dealers will tell you that a car sings and dances and comes with a full tank of fuel and a boot full of M&Ms if it shifts a car.

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RLI
By lionofludesch
18th Aug 2016 13:27

Had a client on FRS, he was very happy, making £1400 a year over the standard VAT method.

Then one year he came in and told me that he'd started to lease a van.

If he'd bought the van, he could have claimed back £1600 VAT on it. Because he leased it, he could reclaim nothing.

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7om
By Tom 7000
22nd Aug 2016 12:43

simple answer...
No

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