Car tax experts a quick question for you
If a company contract-hires a car, including maintenance, I understand that the cost of the maintenance element is 100% deductable against CT and that the VAT element of the maintenance can be reclaimed.
However, if the company purchases the car, are company payments for maintenance, servicing, etc, also deuctable against CT and is the VAT on the maintenance reclaimable?
Thanks in advance for your replies.
Captain
Replies (16)
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Quid pro quo
I ask because of the rules around only claiming back half of the VAT on contract hire payments.
Captain
I imagine that his is just a quid pro quo to recognise that if the car was purchased no VAT on the purchase would be recoverable, but all the rest would be.
Mixed
No VAT Recovery on the acquisition of the Car itself, presuming that it cannot qualify as a Van.
Not sure in respect of the maintenance but to liken it to Fuel BIK I would suggest that the provision of the benefit in kind to the director is in the furtherance of business of the Company and on that basis the VAT recoverable on the maintenance.
As the Car is acquired for the provision to an Employee it will be eligible for WDAs and associated costs allowed for CT.
Mmm...
On contract hire payments you reclaim VAT on 50% of the finance element and 100% of the maintenance element.
Only need minimal business use
An interesting point on maintenance bills (for both company cars and private cars used by sole traders/partnerships) is that you can claim 100% of the input tax even if the car only has the bare minimum of business use. One trip to the Post Office a year would be sufficient. No restriction is necessary for private use of the car, as would be necessary in the case of other types of asset; e.g. computers.
This is in marked contrast to VAT on fuel, where you have to either pay output tax on the scale charges or restrict input tax to business use pro-rata the mileage.
But who is the supply made to?
If the company owned the car and incurred maintenance costs then no problem. But in this scenario the car is owned by the director. Company will need to be careful that the supplier of maintenance makes their supply direct to the company and not the director. If the garage supplies direct to the director then no supply has been made to the company so no vat recoverable. Also, the company is settling a liability of the director so don't forget BIK.
Eh?
Your advice is fine but nowhere in this thread is it stated that the car belongs to the director. It is said that it is 'his' car but I think we assumed that it was a company car for his exclusive use. Perhaps the OP could clairify this?If the company owned the car and incurred maintenance costs then no problem. But in this scenario the car is owned by the director. Company will need to be careful that the supplier of maintenance makes their supply direct to the company and not the director. If the garage supplies direct to the director then no supply has been made to the company so no vat recoverable. Also, the company is settling a liability of the director so don't forget BIK.
The best AW question ever
I'm just wondering why Captain Black's avatar is Captain Scarlet........
The most important question ever asked on AW - I've often wanted to ask but been too scared of the mysterons.
I misunderstood ...
... I thought the car was owned by the director. Company can recover 100% maintenance. See 5.1 of 700/64 and also HMRC manual VIT54500. I would post the link but for some reason AW won't let me paste straight into the post.