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Refinancing a HP Agreement on a Commercial Vehicle

VAT treatment on a Sale & HP refinance

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I have a client looking to refinance an existing HP agreement on a commericail vehicle. The client has claimed the VAT back on the intial purchase. He now has a settlement figure for the vehicle and the questions are

1. Does VAT have to be applied to the settlement figure for the HP agreement as the funder is selling the vehicle ?

2. Does the amount to be refinanced if it is for the settlement figure have to have VAT applied to it and then reclaimed?

 

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RLI
By lionofludesch
27th May 2020 18:27

Is he just paying the loan off early, or what ?

If he is, there's no supply.

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Replying to lionofludesch:
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By BREAKWELL
27th May 2020 18:37

Thanks for your reply. He is looking to settle the existing finance and then refinance at a lower payment with the other finance company paying the settlement figure. He has already paid VAT when he took the vans

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RLI
By lionofludesch
27th May 2020 19:14

BREAKWELL wrote:

1. Does VAT have to be applied to the settlement figure for the HP agreement as the funder is selling the vehicle ?

You say the funder is selling the vehicle. As far as I can gather, it's not his to sell. It remains the clients property - for accounts and tax purposes, if not in strict law.

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RLI
By lionofludesch
27th May 2020 19:14

Duplicate

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By Duggimon
27th May 2020 19:27

If it's a new loan to pay off the old loan and he retains ownership of the vehicle throughout, there's no application of VAT.

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