Claiming VAT on Purchase of Personal Car

Can a company claim VAT on the car purchased in the name of director.

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Hi

 

Company director applied for the car purchase through company but application was rejected. But after two days sales agent offer the director to buy the car personally. Company is an e-commerce business with a turnover average 20k pe quarter and in the business for about 2 years. Can a company claim VAT on the purchase of the car which will be on the name of director and mostly used for the business purpose.

Replies (17)

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By Wanderer
21st Sep 2023 03:34

No.

Furthermore the company couldn't claim the VAT even if it was all in the company's name.

Thanks (1)
Replying to Wanderer:
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By ayaz786ahmd
21st Sep 2023 03:48

Thanks for the reply but if the car is being used 100% for business use still we cant claim? refer to 3.5 in the following link
https://www.gov.uk/guidance/vat-on-motoring-expenses-notice-70064#input-...

Another query is what about if its a mobile phone instead of car. Still we cant recaim VAT if bought on director's name instead of company?

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Replying to ayaz786ahmd:
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By paul.benny
21st Sep 2023 06:27

Does the car meet the test of not being *available* for private use?

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Replying to ayaz786ahmd:
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By Bobbo
21st Sep 2023 09:52

ayaz786ahmd wrote:

Thanks for the reply but if the car is being used 100% for business use still we cant claim? refer to 3.5 in the following link

Small e-commerce business using a car 100% for business purposes? Yeah sure whatever you tell yourself

Thanks (5)
Replying to ayaz786ahmd:
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By Wanderer
21st Sep 2023 10:28

ayaz786ahmd wrote:
...and mostly used for the business purpose.

ayaz786ahmd wrote:

Thanks for the reply but if the car is being used 100% for business use..

You need to make your mind up.
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Replying to Wanderer:
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By ayaz786ahmd
21st Sep 2023 11:37

question from a question to see which option will be more viable

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Replying to ayaz786ahmd:
By Ruddles
21st Sep 2023 11:56

Neither

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Replying to ayaz786ahmd:
RLI
By lionofludesch
21st Sep 2023 12:25

ayaz786ahmd wrote:

question from a question to see which option will be more viable

You don't need to convince us that the car is used 100% for business.

You need to convince HMRC.

We don't believe it - what do you think HMRC will believe?

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Replying to lionofludesch:
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By ayaz786ahmd
21st Sep 2023 13:26

thats why asking what is the rule in multiple situations. Few people help and few just argue

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Replying to ayaz786ahmd:
RLI
By lionofludesch
21st Sep 2023 13:35

There's no arguing. The rules are clear.

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RLI
By lionofludesch
21st Sep 2023 07:11

[sigh]

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VAT
By Jason Croke
21st Sep 2023 08:09

Where does the driver of the car live?

If they work from home then it's not exclusively for business is it? The car cannot be made available for personal use....how do you make a car unavailable for personal use when it sits on your driveway? Do you have another car you can use to pop down Asda lunchtime to grab a meal deal?

If they drive from home to office, that isn't a business journey either is it?

Paragraph 3.5 is easy to mis-read, everyone skips over the 'available' word and that's the one word that matters most.

Before any of that, you also have the issue the purchase is made by the individual so it's not a purchase made by the business, it's made by the individual.

There's a reason that most business owners lease cars not buy them.

Thanks (4)
Replying to Jason Croke:
RLI
By lionofludesch
21st Sep 2023 08:50

Jason Croke wrote:

Where does the driver of the car live?

If they work from home then it's not exclusively for business is it?

The OP doesn't claim it is exclusively for business. He says "mostly", at which point the plan is dead in the water.

Thanks (3)
Trevor Steel
By Trevor Steel
21st Sep 2023 08:12

No VAT recovery available on the car. Even if it was bought by the employer, "mostly used for business purposes" isn't enough. Nor would only using for business purposes be. There would have to be some way in which it was completely unavailable for private use - for example, kept at the workplace, with the being unable to access the keys.

No VAT recovery on the phone either, if the contract is between the supplier and the director personally. The VAT registered company would have to receive the supply from the supplier, in order to recover VAT. If the company did receive the supply, you would need to consider whether there is any private use made of it - see:

https://www.gov.uk/guidance/vat-private-use-and-self-supply-of-goods-and...

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By Matrix
21st Sep 2023 08:20

You can claim VAT on mileage and VAT on business calls where the expense is reclaimed from the company.

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VAT
By Jason Croke
21st Sep 2023 08:20

OP. You cannot compare a mobile phone to a car. Why?

Because the law explicitly blocks input tax recovery on cars with a few exceptions for starters.

Also, a mobile phone in name of a director is also technically wrong, to reclaim VAT the invoice must be in the name of the business. That HMRC turn a blind eye to this is more to do with low values being involved, but a thing a business buys must be in the name of the business. Link here where HMRC expect you to apportion business and personal calls.
https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit43940

Likewise buying stuff off Amazon, most people use their personal account, if HMRC see invoices from Amazon and are in a mood to make a point, HMRC could deny input tax on basis invoices not addressed to the business.

So you can't reclaim VAT on mobiles either although with a bit more common sense flexibility from HMRC as not burdened by a specific input tax law relating to cars.

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By JCresswellTax
21st Sep 2023 10:50

Pretty basic questions - are you an accountant?

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