Ned
Blogger
Share this content
0
4
1818

Hire Purchase Agreement

Can anyone clarify for me the correct way to treat the vat on a HP agreement. Should the input vat be claimed as the repayments are made over, in this case the 5 year period. Or can the vat be reclaimed at the start if say the total vat element is £10k and an initial payment of £20k has been made? As a seperate matter the finance charge will be expensed to the periods it relates to over the 5 year period.

Replies

Please login or register to join the discussion.

At the start

You claim all the VAT at the start of the HP agreement.

Thanks (0)

many thanks

Thanks (0)

Yes claim at start by posting the Invoice for the purchase of the item.  You will not have been sent a  VAT schedule for the reclaim over the period as you would have in the case of a lease.

The payments reduce the HP Liability and a separate posting is made to claim the monthly interest on the P&L, crediting the HP Account.

 

 

 

 

 

 

 

 

 

 

 

Thanks (0)

Vat on HP agreement

Thanks Jane thats very helpful.

Thanks (0)