VAT reclaim on car purchase

Private hire taxi

Didn't find your answer?

Am I correct that Ltd Co is allowed to reclaim all VAT on purchase of 8 seater Ford Transit passenger van (playload less then 1 ton) if it is not available for private use?

 

Replies (16)

Please login or register to join the discussion.

Worm
By TheLambtonWorm
20th Jul 2016 16:57

I think you can claim input VAT on any car that's not available for private use, and also actually has zero private use.

Never seen in happen in practice though, and I dare bet you'd need impeccable records should it be subject to an enquiry.

Thanks (0)
chips_at_mattersey
By Les Howard
20th Jul 2016 19:28

If the car is to be used as a taxi, then yes you can. But you will need to evidence the taxi use, such as taxi licence.
If it is for business use, then the 'Upton' case applies, such that the vehicle had to be unavailable for private use.

Thanks (1)
Replying to leshoward:
avatar
By free-rider
20th Jul 2016 22:54

Thank you for your replies.

The private hire licence is in place and just need to make sure that a proper clause is inserted in contracts with drivers forbidding private use and detailed mileage log is kept to back this up.

Thanks (0)
Replying to free-rider:
Worm
By TheLambtonWorm
21st Jul 2016 09:29

Just be careful on this. For all input recovery is allowed for exclusive business use - I would expect that HMRC would challenge this point vehemently.

Thanks (0)
Replying to TheLambtonWorm:
avatar
By free-rider
21st Jul 2016 10:04

The Ltd Co is registered and trades from the owner/Director home address and all 8-seater cars are kept there overnight, so drivers pick these up in the morning for airport runs and then return back to the Co reg address. So the cars are not available for drivers` private use.

Director is also doing airport runs and uses one of the cars for that. He claims that it is used only for business purposes as he has another car registered on his own name which is used for private journeys.

I`m anticipating a hot fight with HMRC on this one as the Co (new client) has reached VAT threshold early last year but registered just a month ago (backdated).
Looking to recover VAT on purchase of several cars made before registration.

Thanks (0)
Replying to free-rider:
Worm
By TheLambtonWorm
21st Jul 2016 10:29

The situation is a lot worse with all cars being kept at the directors home.

Personally I'd be extremely reluctant to claim VAT on these, or at least I'd be telling the client to expect to have to pay it back.

The problem isn't (as much) the drivers having the availability or private use in this case - it's the director, and you'd have to prove that it wasn't available for him.

Proving that the cars aren't available for him might be very difficult, especially given the fact that the client uses them for airport runs himself, then returns them to his home/work.

You'd also likely need to account for every mile done in the cars to prove there have been no private journeys. It might be hard getting the drivers to do this.

I'll hold my hands up though - I haven't actually dealt with a case like this before so there may be someone in a better position to comment, but that's my take on it.

Thanks (0)
By mrme89
21st Jul 2016 10:31

Off topic slightly, but I'm surprised they didn't go for 10 seaters instead of 8 seaters.

Thanks (0)
Replying to mrme89:
Portia profile image
By Portia Nina Levin
21st Jul 2016 10:41

Because then you need drivers with PSV licences if you intend to use them for hire or reward.

Thanks (1)
Replying to Portia Nina Levin:
By mrme89
21st Jul 2016 10:44

Yeah, good point. Touché.

Thanks (0)
Portia profile image
By Portia Nina Levin
21st Jul 2016 10:39

Well are we not just all getting our collective complete b*llocks in a twist here.

If it can be evidenced that, at the time of acquisition, the car was intended to be used predominantly as a taxi, you can recover the input VAT (all of it) - end of - irrespective of whether there will be or is any private use; if there is subsequently any private use there is an output VAT charge, under the private use of assets provisions.

TheLamptonWorm appears to be confusing the direct tax provisions with the VAT provisions. For direct tax purposes it should be possible to avoid benefits in kind though, subject to the precise actual circumstances.

The three bullets in paragraph 3.1 of VAT Notice 700/64 are "or"s rather than "and"s: https://www.gov.uk/government/publications/vat-notice-70064-motoring-exp...

Thanks (2)
Replying to Portia Nina Levin:
Worm
By TheLambtonWorm
21st Jul 2016 10:55

I was aware of the different provisions, but didn't know, or more likely forgotten about the little (and very important) bit regarding taxis.

Apologies for the nonsense, and I'm glad you pointed it out before my rotten advice was taken.

Thanks (0)
Portia profile image
By Portia Nina Levin
21st Jul 2016 10:40

WTF is a playload incidentally?

Thanks (0)
Replying to Portia Nina Levin:
Worm
By TheLambtonWorm
21st Jul 2016 10:49

Keep scrolling and you'll eventually see.

Maybe i'm getting my websites confused too though.

Thanks (0)
Replying to Portia Nina Levin:
avatar
By free-rider
21st Jul 2016 11:07

Thank you PNL for the reassurance.

The cars were acquired solely for the business purpose to be used as a private hire/taxi vehicles. Any private use (if any) is very minor and incidental.

The playload unfortunatley is below 1 ton - I`ve checked the list of vehicles HMRC considers to be vans and none of them is there. Otherwise it would be too esy.

Thanks (0)
Replying to free-rider:
avatar
By Duncan Cameron
21st Jul 2016 17:45

PLN asked what is a playload, not what is the playload?

I don't think it's an eggcorn or mondegreen; I'll plump for a malapropism.

Thanks (0)
Worm
By TheLambtonWorm
21st Jul 2016 11:26

Just as a point of advice that you can rely on free rider...

If you want to receive a prompt response from PNL, follow these steps:

1) Create your post
2) Create a stooge account and reply to your own post with some nonsense, purporting to be correct, preferably in a pompous fasion.
3) The correct answer will shortly follow

Thanks (5)