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Definition of a new car for Company car purposes

Looking to clarify that HMRC define a new car as being one with 0 previous owners on V5

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With the chip shortage and related lack of new car stock im looking to clarify if an ex demonstartor woukld qualify as a new car, Client wishes to take advantage of the benefits associated with an EV but lead times are upto 60 weeks in some cases.  Can someone please advise on the deciding factor if the car is classed as new or used please

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ghm
By TaxTeddy
27th Apr 2022 11:00

I would think it's unlikely that the legislation defines "new" as the term is fairly clear in most cases.

As far as demonstrator vehicles are concerned, my understanding is that it is originally registered to the dealership (it has to be registered to someone) so by its very nature it is always secondhand.

Certainly, all of the demonstrator vehicles I have seen have been priced as being secondhand.

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By rmillaree
27th Apr 2022 12:26

TaxTeddy
"As far as demonstrator vehicles are concerned, my understanding is that it is originally registered to the dealership (it has to be registered to someone) so by its very nature it is always secondhand."

Would this be enough to change your mind Teddy?

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23153

"New cars are ‘unused and not second hand’. You should accept a car is unused and not second hand even if it has been driven a limited number of miles for the purposes of testing, delivery, test driven by a potential purchaser, or used as a demonstration car."

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Replying to rmillaree:
ghm
By TaxTeddy
27th Apr 2022 15:32

You see? That's what I like about this forum - I learn things that I thought I knew were wrong and learn things that I didn't know I needed to know.

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Replying to TaxTeddy:
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By I'msorryIhaven'taclue
27th Apr 2022 16:13

It makes you wonder how we all used to manage pre-internet.

This forum's always been better than any CPD.

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Replying to TaxTeddy:
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By Paul Crowley
28th Apr 2022 05:17

Same here
Tax related knowledge has a really short half life
Once we think we know, it sticks

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Replying to Paul Crowley:
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By Tax Dragon
28th Apr 2022 05:47

I find that, once I think I know, it changes.

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Replying to Tax Dragon:
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By Hugo Fair
28th Apr 2022 11:24

Which is why there are few quantum physicists also making a living in taxation practice ... for them it's their observation of it that causes it to change.

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Replying to Hugo Fair:
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By Tax Dragon
28th Apr 2022 14:28

There's something in that. Sometimes someone's observation causes everyone else's (and indeed maybe their own) understanding of the law to change. Think of any of the 'defining' tax cases. The result may seem like the law has changed. And maybe it in fact has. (I've grown up in the post Ramsay period. Did, eg, Ramsay change the law?) Or... was the law the law anyway, it's just that no-one knew it? (A bit like, on your physics theme, I don't think Newton invented gravity. I would imagine apples fell on people's heads before his. But, I suppose, no-one knew it until Sir Isaac pointed it out.)

Warning: my philosophy is worse than my tax. Caveat emptor.

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Replying to Tax Dragon:
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By Hugo Fair
28th Apr 2022 16:22

No warning needed ... one of the beauties of philosophy (in a non-academic environment anyway) is that it is always based on the personal perspective.

A bit like bumble bees, your forebears didn't need to understand the rules of aerodynamics or even have the concept of what flight might be ... they just got on with flying (unless I've been mis-informed about the evolution of dragons)!

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By David Ex
27th Apr 2022 11:00

Do you mean for capital allowances? Have you looked at the HMRC Capital Allowances Manual? I suspect the answer is in there.

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By rmillaree
27th Apr 2022 11:42

for tax or for vat ? or both ?

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By [email protected]
27th Apr 2022 11:51

Purely for CA's , you can't claim VAT

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Replying to [email protected]:
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By I'msorryIhaven'taclue
27th Apr 2022 12:14

According to the font of wisdom at https://www.cargurus.co.uk/Cars/articles/can_i_reclaim_vat_when_buying_a...

"Anybody buying a new car, including a pre-registered model or one with delivery mileage, needs to pay VAT at the full rate of 20%.

There's also a para about "VAT-qualifying" second hand cars. And leasing "new" cars. Both are exceptions to your rule (that you can't claim VAT).

Ahh, but you want to know about CAs. You'd be excused for thinking, given the VAT treatment of demo-cars (ie cars pre-registered with the dealer), that the CA treatment should follow a similar course by regarding such vehicles as new. But I don't know that; hopefully you'll be encouraged to keep looking.

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Replying to I'msorryIhaven'taclue:
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By [email protected]
28th Apr 2022 13:59

Thanks again for all of the useful info, I have read HMRC CAs manual in more detail. I have one final query, my understanding is that the order for a new EV needs to be placed in the accounting period , not when the vehicle is delivered. Has anyone any real life experience of this?
Cars are on a long lead time just now, so if we ordered before May 22 year end - this would be allowable for FYA - correct?

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Replying to [email protected]:
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By I'msorryIhaven'taclue
28th Apr 2022 15:00

https://www.gov.uk/capital-allowances/annual-investment-allowance

see "When you can claim" (ie the four month rules).

I like your style. Are you by chance a fan of Lieutenant Columbo?

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By [email protected]
27th Apr 2022 12:42

Thank you , most of you anyway, I think I have enough information now.

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By I'msorryIhaven'taclue
27th Apr 2022 13:21

Watch out for second-hand cars being passed-off as ex-demo vehicles or delivery mileage only.

I have a client who sold back his Tesla to the dealership last year for £5k more than he paid for it. He owned it for just a few weeks, with negligible mileage. I've also come across (Youtube) tales of people returning their new EVs within days because they're disappointed with them.

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Replying to I'msorryIhaven'taclue:
paddle steamer
By DJKL
27th Apr 2022 16:21

Course they are, they do not make pleasurable engine noises.

Are there any models now that come with artificial exhaust sounds- make your Fiat 500 sound like a Ferrari?

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Replying to DJKL:
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By I'msorryIhaven'taclue
28th Apr 2022 14:50

Well I nearly got mowed down by a Tesla the other day (no, no.. it wasn't driverless. It just crept up silently on my blind side)

Those low-slung go-striped kiddy cars with lawnmower engines that wouldn't pull your hat off but which sound like Russian tanks seem to be out of vogue these days. One pulled into a pub on the Purbecks at the weekend and nearly took its sump off - the car park being better suited to 4x4s. Everyone laughed, except of course for the hot-rodder and his mate.

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
28th Apr 2022 16:15

Ah, schadenfreude ... best savoured slowly on a hot summer's day.

Like an old mate of mine who lives in a small bungalow but on a very desirable plot (garden running down to the Thames with own mini-island) ... who watched his increasingly wealthy new neighbours knocking down their house and rebuilding it in a far grander style.
This then included a massive new boathouse on the river-bank, in which an enormous cabin cruiser was hand-built by imported craftsmen.
Unfortunately (or not depending on your perspective), when it came time for the grand launch they found the draft at the exit of the boathouse to be considerably insufficient to effect egress to the main channel!

I can still hear my friend's raucous laughter echoing across the water ... and, no, he hasn't been invited to subsequent parties hosted at the 'big house'.

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By I'msorryIhaven'taclue
29th Apr 2022 09:23

Heh heh, I had grandiose next-door neighbours who'd moved into their mother's house and used her cash to build outwards and upwards, so that their house was double the size of everyone else's; and they always had a monster car on loan because "Boycie" was a salesman at a prestigious car dealership.

It didn't take us long to figure out that the reason we were regularly invited to their rather grand garden parties was so that they could borrow our rather grand BBQ set, with yours truly as chef, and much of our garden seating. Sometimes that would extend to borrowing from our drinks cabinet if their party ran out of booze.

At one such party, with Bentley customers and everyone important from our end of town in attendance, they placed their dopey son-in-law in charge of our BBQ range. What a cheek! It was evident that we ourselves weren't invited on this particular occasion, so we took the hint and returned to our side of the fence. Their comeuppance came later that day when their son-in-law food-poisoned pretty much everyone in attendance with his under-cooked chicken. Much groaning and belly-aching, and we even heard one or two of the guests heaving and chucking-up.

Ah, schadenfreude!

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Replying to Hugo Fair:
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By geoffmw1
29th Apr 2022 10:15

you mean draught

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By Hugo Fair
29th Apr 2022 12:26

Well I didn't ... but, mea culpa, I slipped inadvertently into Americanese.
Standards really are slipping everywhere, aren't they!!

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