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VAT and electric vehicle charge point installation

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A company has provided an employee with an electric car (available for both business and private use) and will pay for a charging point to be installed at the employee's home.

Does anybody know if the VAT incurred by the company on the charging point installation can be recovered as input tax?

Replies (13)

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chips_at_mattersey
By Les Howard
16th Mar 2022 14:21

I fear not.
The supply of the charging point is to the householder, not the company, as the house is not owned by the company.
The supply is for the private use of the employee not the business use of the employer.
You may wish to challenge - see you in Tribunal!

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VAT
By Jason Croke
16th Mar 2022 17:34

Hmm. Interesting question.

Certainly with the electricity used to charge a vehicle at home, there is no input tax recovery for the company because the electricity is supplied to the household, not to the business and this is in line with HMRC's guidance.
https://www.gov.uk/government/publications/revenue-and-customs-brief-7-2...

But the question asked is about the EV charging point. Presumably the employee had to engage directly with the installers (ie, the supply is between employee and the installer) and the employee is asking the employer to settle the install invoice? So the invoice will not be addressed to the company....or are you saying the employer contracted with installers to install the charger point?

But then what about all those home offices which sprung up during lockdown, those £25k glamour sheds/offices? VAT can be reclaimed where the company pays for a shed office at the home of an employee/Director. Article from Aweb on garden sheds.
https://www.accountingweb.co.uk/tax/personal-tax/the-garden-office-part-...

What about a home worker who has to buy a new desk or office chair from Amazon and puts an expense claim form to get their money back and in doing so, the employer can now reclaim the VAT as the office chair and desk now belong to the company having reimbursed the employee. HMRC says you can claim VAT on employee expenses as long as they meet the usual rules - business purpose, not used for business entertaining, not used in making exempt supplies, etc.
https://www.lexisnexis.co.uk/tolley/tax/guidance/overview-of-vat-recover...

Even if employee paid and put an expense claim form in, as we know it will be used for personal and business purposes then some sort of apportionment would be required, you couldn't have all the input tax and that is assuming HMRC accept that an EV point can have a dual personal/business purpose.

Installs cost around £600 + VAT, so you're looking at £120 VAT of which you'd need to apportion to reflect personal use and assumes that HMRC will accept that an EV charger can have a dual private/business purpose. Worth the hassle?

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Replying to Jason Croke:
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By Wanderer
16th Mar 2022 17:45

Jason Croke wrote:

But the question asked is about the EV charging point. Presumably the employee had to engage directly with the installers (ie, the supply is between employee and the installer) and the employee is asking the employer to settle the install invoice? So the invoice will not be addressed to the company....or are you saying the employer contracted with installers to install the charger point?

Think I'd prefer it if the employer did contract directly with the installer. Not a VAT reference but:-
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23900
indicates no taxable benefit. Haven't looked at the legislation behind it but generally one doesn't want an employer settling or reimbursing an employee's contracted cost.
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Replying to Jason Croke:
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By Ben McLintock
17th Mar 2022 16:12

Jason Croke wrote:

But the question asked is about the EV charging point. Presumably the employee had to engage directly with the installers (ie, the supply is between employee and the installer) and the employee is asking the employer to settle the install invoice? So the invoice will not be addressed to the company....or are you saying the employer contracted with installers to install the charger point?

Thanks Jason... good question! The employee was authorised to instruct a qualified installer on behalf of the company, and all correspondence has been through his work email address. There's no contract as such, just a quote - however the installer has since raised an invoice addressed to the employee, presumably they just automatically billed to the install location.
Hoping this can be corrected.

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Replying to Ben McLintock:
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By Tax Dragon
17th Mar 2022 17:06

Ben McLintock wrote:

Hoping this can be corrected.

But... is a charging point (unlike a desk or the removeable pod-sheds) fixed to the property? IANAL but if ownership is relevant (as Jason seemed to imply) then might affixation to the land not also perhaps be relevant?

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Replying to Tax Dragon:
Ivor Windybottom
By Ivor Windybottom
21st Mar 2022 10:13

Good point.

From a transfer of ownership position for BIK's my view is that a company may be given a right to site its equipment on the employee's land, but when this lease/permission expires it will revert to the employee as landowner if it is sufficiently permanently attached and at which point ownership transfers and a BIK arises (if applicable). This is typically seen with garden offices, but may apply to charging stations if they form a permanent installation.

Whether this is relevant to the VAT treatment I'm not sure. Would need to think!

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By Hugo Fair
16th Mar 2022 21:23

I know it's not relevant to OP's question, but there's a growing number of questions relating to this concept of an employer paying for an EV Charging facility (on the employee's premises) ... and I can't see why the employer would offer to pay for this?

What happens when the employee ceases employment (possibly a month later)? What happens if the facility is never used for any EV journeys relevant to original employer?

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Replying to Hugo Fair:
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By Tax Dragon
17th Mar 2022 06:43

I think that might be relevant to the question. Is ownership relevant? Jason mentions it half way through his post. If so... who owns the charging point? (In Jason's examples, who owns the shed, the desk etc?)

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By GMTax
21st Mar 2022 17:13

Is this any different from the employer-provided home desk example if we extend to the case of employer-provide shelving which becomes a F&F attached the wall of the employee's home?

Or perhaps a closer analogy would be when the employer pays for an extra socket to be installed in the employee's home because without it the employee cannot safely plug in the essential PC needed to work from home.

With the pandemic, employers have clearly been reimbursing all kinds of in-home expenses to employees in order to enable them to work from home. So there are issues about VAT and BIK all over the place. Surely HMRC will take a pragmatic approach in such cases and accept that the cost was incurred primarily as an expense in support of the employer's business.

It cannot be right for employees to be taxed on small works carried out in their homes that the employer considered was reasonably necessary to enable the employee to work safely from home during the pandemic.

In the case of the EV charger, if the employee is required to undertake business trips directly from his/her home to clients of the business, doesn't the same principle apply?

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Replying to GMTax:
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By Tax Dragon
22nd Mar 2022 09:32

GMTax wrote:

doesn't the same principle apply?

I love this. As if your "surely", "pragmatic" and "cannot be right" (etc) had established a principle.

But, to answer the question (as regards direct taxation anyway - I leave the VAT aspects to Les, Jason & Co [trademark pending])... no.

ITEPA s316 and s316A are where most of the exemptions relevant to your "principle" are to be found. But s316(5)(b) excludes the extension, conversion or alteration of living accommodation, or other structure on land adjacent to and enjoyed with such accommodation, from those exemptions. So a desk may be exempt under s316 but a new power socket cannot be.

An EV charging point would likewise fall foul of s316(5)(b). But it is nevertheless exempt, if it is provided to charge a taxable company car, because of s239(4).

In short, HMRC does not apply pragmatism. (It used to, to some extent, but it's had its wings clipped.) It does not follow "surely"s , "cannot"s or non-existent Pauline extrapolations. It's been told to, and does, apply the law.

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By fawltybasil2575
22nd Mar 2022 13:22

Ben McLintock (OP).

As Tribunal cases have confirmed, it is not relevant to determine which person may have BENEFITTED from the goods or services supplied. As ever, one must draw a distinction between PURPOSE and BENEFIT. You advise that the employer requested the employee to (impliedly at least, as agent for the company) arrange for the supply of the charging point. The matter thus turns on whether the employee, when contacting the charging point supplier, made it clear that he was doing so as agent for the company or alternatively as the principal.

It matters not that the invoice is made out to the company (albeit it would be safer if the invoice could be made out to the company, to avoid HMRC’s claiming that the employee is the customer). It also matters not that the charging point is at the employee’s own dwellinghouse. The dual purpose rule (under which no Input Tax can be claimed if there is a dual purpose) does not apply (if, as I surmise is almost without doubt, the employer’s sole purpose will have the provision of a charging point for the providing of electricity to enable the employee to carry out his employment duties – regardless of the fact that they would have known that the employee would obtain automatically a personal “benefit” from the charging point).

Frankly, the minimal amount at issue renders it almost inconceivable that HMRC would seek to challenge the Input Tax recovery - that said, on a matter of principle, I believe that the VAT is fully recoverable IF (CRUCIALLY) the employee advised the supplier that he was ordering the charging point as AGENT for his employer (and the supplier did not dispute that agency aspect).

Basil.

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Replying to fawltybasil2575:
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By Tax Dragon
22nd Mar 2022 14:04

fawltybasil2575 wrote:

Frankly, the minimal amount at issue renders it almost inconceivable that HMRC would seek to challenge the Input Tax recovery.

We see these triviality points made most days in this forum. But if (as Jason says) it's £120 a pop and if (as Tom7000 says) there are 1,000 of these every week - that's potentially over £6m of lost tax revenue every year. HMRC can and do take 'trivial' cases just to prove precedent. A good accountant, such as yourself, Basil, will be aware of - and will apply - the outcome.

One would hope that, if (and, as you say, crucially) an agency existed and was agreed with the supplier, that fact would be reflected in the invoice the supplier raised.

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By fawltybasil2575
24th Mar 2022 12:22

@ Tax Dragon (your post at 14.04 on 22 March 2022 – apologies for lateness of response).

Re the “statistics” part of your post, then [on the assumption that Tom7000’s estimate of 1,000 installations weekly is correct- presumably such estimate is a post on another AWEB thread] I assume that this figure relates to ALL EV supplies to homes. However, only a tiny part of that weekly 1,000 figure would presumably fit the scenario in the OP’s question (ie the scenario under which the employer instructs the employee to arrange for the supply, but agrees to pay for such supply). Hence, your estimate of the total VAT at issue nationally appears, I would respectfully suggest, to be substantially overstated.

Whilst I of course agree the basic principle in your comment that “HMRC can and do take 'trivial' cases just to prove precedent”, IMHO the circumstances of the OP’s client’s case render it very unlikely that HMRC would pursue the matter to Tribunal (especially since the chances of HMRC success would, I submit, be minimal).

Furthermore, HMRC’s IDENTIFYING those cases where the Input Tax could have been claimed (in THEIR eyes) in error, would be exceptionally difficult.

For the various reasons above, I reaffirm that IMHO the Input Tax should be claimed “without a second thought” (as long as the employee acted as principal, in requesting the supply, and evidence thereof can be established - the fact that the invoice might be addressed, strictly incorrectly, to the employee would not itself be a valid reason for disallowing the Input Tax).

Basil.

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