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Disability living allowance/motobility

Does anybody deal with a car supplied by DLA/Motobility

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Day before I need to file a client's self-employed tax return, and he has come across something online about claiming a tax relief on a percentage of his car suppplied by Motobility in lieu of Disability living allowance. His young son is disabled and they supply a car for him for free (including insurance, service etc), but they knock £57.95 per week off the parent's DLA (which is untaxable) for the mobility element. He uses the car partly for his business and so wants to add on that £57.95 per week as part of the total running costs of the car. I've never come accross it before, and can see the logic behind it, but has anybody else done it or know anything about it ?        

Replies (17)

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By David Heaton
30th Jan 2020 12:42

I've never come across this, but going back to basics: has he (personally) incurred an expense wholly and exclusively for the purposes of the trade?

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Replying to David Heaton:
By kenny achampong
30th Jan 2020 13:28

A percentage of the journeys are wholly and exclusively for the purposes of the trade. It's perfectly normal to claim a percentage of car/running costs.

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Replying to kenny achampong:
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By DouglasN
30th Jan 2020 13:34

What car/running costs have been incurred? I'm guessing fuel is the only cost in this situation.

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Replying to DouglasN:
By kenny achampong
30th Jan 2020 14:07

Thats what I would have assumed. But his argument is that the reduction in his (untaxable) DLA is in essence car running costs.

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Replying to kenny achampong:
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By Accountant A
30th Jan 2020 15:44

kenny achampong wrote:

Thats what I would have assumed. But his argument is that the reduction in his (untaxable) DLA is in essence car running costs.

It isn't HIS Disability Living Allowance, it's his son's Disability Living Allowance. The client is acting for his child.

The £58pw has been surrendered to provide the child with transport. It has absolutely zilch to do with the client's business.

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By Accountant A
30th Jan 2020 12:58

Two things:

My understanding is that the DLA isn't the parents' money, it's the child's. That being the case, there is no deduction as the expense has not been incurred by the parent/s.

The other obviously challenge is whether the business use of the vehicle is within the terms under which it is made available.

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Replying to Accountant A:
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By thevaliant
30th Jan 2020 13:48

Almost certainly not.

https://www.motability.co.uk/about/how-the-scheme-works/how-your-vehicle...

If I were OP, I'd give them a health warning that they could be committing fraud, and be less worried about the tax allowance of the whole thing.

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Replying to thevaliant:
By kenny achampong
30th Jan 2020 14:12

Interesting, but I can't see much wrong there "The car must not be used for commercial purposes e.g. as a taxi or delivery vehicle.", which it isnt.

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Replying to kenny achampong:
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By paul.benny
30th Jan 2020 14:26

Quote:
We'll ask you to make sure the car is used by, or for the benefit of, the disabled person. ... In practice, this means other named drivers in the household can use the car for shopping and other routine activities, as long as the disabled customer will benefit.

It's not obvious how the parent's business use of the motability car is for the benefit of the disabled child.

And quote correctly from the guidance

Quote:
Misuse would include...Using the car for unauthorised business purposes, for example, as a taxi driver or delivery vehicle

You can convince yourself that business use of the car by a parent doesn't fall within these conditions but I wouldn't want to argue the case with the DWP.

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Replying to paul.benny:
By kenny achampong
30th Jan 2020 14:34

A motobility car is for the entire family who have a disabled child, not just the disabled child. You can't expect the disabled child to have their own car and the others have to get another car for everybody else. But anyway, this is going way off tangent...

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Replying to kenny achampong:
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By paul.benny
30th Jan 2020 15:54

Methinks you do protest too much.

You shouldn't be using the car for business purposes and certainly shouldn't be claiming any deduction for that use on your tax return. Sorry. Your client shouldn't be...

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Replying to kenny achampong:
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By Accountant A
30th Jan 2020 15:40

kenny achampong wrote:

Interesting, but I can't see much wrong there "The car must not be used for commercial purposes e.g. as a taxi or delivery vehicle.", which it isnt.

Isn't what? "e.g." means "for example", it's not an exhaustive list.

Are you saying 'commercial purposes' are different from your client's use?

https://www.motability.rsagroup.co.uk/policy-using-your-car.html

"If you need to use the car for business purposes, other than the journey to your usual workplace, you can arrange business use cover for most occupations."

So, has the client arranged business cover? If yes, good, then the question is just a tax one. If not, client has been using the vehicle without valid insurance when he has been using it for his business.

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Replying to Emrys:
By kenny achampong
31st Jan 2020 08:36

I havnt asked him obviously, but assume the insurance company know his profession, and so also assume he is insured. Not sure how a question about a reduction in DLA, in effect him paying £57.95 per week for the car has turned into this!

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Replying to kenny achampong:
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By Accountant A
31st Jan 2020 14:41

kenny achampong wrote:

I havnt asked him obviously, but assume the insurance company know his profession, and so also assume he is insured. Not sure how a question about a reduction in DLA, in effect him paying £57.95 per week for the car has turned into this!

If your client has paid additional insurance for business use (which is how I interpret the text in the link I posted yesterday), then that probably counts as a business expense as it explicitly relates 100% to business use.

You keep referring to your client paying or having a reduction of £58pw. I'll just say this once more. The Disability Living Allowance is the child's. The £58pw has been surrendered to provide a car for the use of the child and his family. The £58pw is not wholly or partly an expense incurred by the father in providing a vehicle for his business use. There is, therefore, no deduction (other than possibly fuel, as someone else mentioned, and business use insurance).

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Replying to Accountant A:
By kenny achampong
31st Jan 2020 15:12

I was only repeating the original question to make the point that the original question had veered off into car insurance, racism, children dying in accidents, fraudulent driving etc etc. I think you probably realise that though and so you probably didnt need to bother 'saying it once more'

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Replying to kenny achampong:
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By Accountant A
31st Jan 2020 16:43

kenny achampong wrote:

you probably didnt need to bother 'saying it once more'

I did because you still keep representing this as a payment made by the client ("him paying £57.95 per week for the car") which it isn't. Do you accept that the client is not making payments of £58pw because it is not his DLA, it's his son's?

I'm trying to help you, by the way, by pointing out the correct analysis!

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By In a Daze
30th Jan 2020 15:39

We have a disabled car for my son and i can tell you without a doubt it cannot be used for business purposes, This is made very clear when you pick up the keys.

Once you mention to a insurance company it is a disability car they will not insure it for business purposes.

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