Share this content

VAT on new commercial vehicle

When to reclaim?

Didn't find your answer?

My husband is a sole trader, VAT registered. He has just disposed of his 10 yr old van and takes delivery of a pre registered van on May 1st. Am I correct in thinking he should reclaim all of the VAT on his next return rather than bit by bit over the 48 monthly HP repayments? What if this puts him into a repayment position?

Replies (12)

Please login or register to join the discussion.

chips_at_mattersey
By Les Howard
29th Apr 2019 14:27

If he is buying the van on HP, and paying the full VAT amount at the of purchase, he can claim the VAT in full.
Make sure you have a proper VAT invoice, so you can provide to HMRC if they query the repayment.

Thanks (1)
Replying to leshoward:
avatar
By Sarah Nichols
17th May 2019 08:15

The initial deposit payment covered the total VAT amount plus delivery and admin fee. However, the invoice from Renault Central Fleet Hub is addressed to the finance company, RCI Finance, with my husband's business name and address in an adjacent field entitled "customer name & address" -will this be accepted by HMRC? I have read elsewhere of a company of accountants struggling with this but Renault tell me this invoice format is all that is required and is their standard template...

Thanks (0)
Replying to Sarah Nichols:
RLI
By lionofludesch
17th May 2019 09:22

We advised you that the smart plan would be to de-register.

Thanks (0)
Replying to lionofludesch:
avatar
By Sarah Nichols
18th May 2019 17:29

Unhelpful at this point. Big contract has just been confirmed so deregistration not an option in the near future.

Thanks (0)
Replying to leshoward:
avatar
By Sarah Nichols
18th May 2019 17:37

Les,can you add anything re my further posting please?

Thanks (0)
RLI
By lionofludesch
29th Apr 2019 15:38

Agree with Les - if it's proper HP, you can claim straight away.

If it's some sort of lease, you'll need to claim month by month.

Read the agreement carefully.

Thanks (1)
avatar
By fawltybasil2575
19th May 2019 14:05

@ Sarah Nichols (OP).

On the assumption that the “further posting” referred to in your post yesterday, at 17.37, is your 8.15 post on that day, then the Renault invoice is entirely in order, and the VAT thereon can be claimed in the normal way.

Your husband is indeed the “customer” to whom the van has been supplied. The further entry, on that invoice, of the name of the finance company, is also entirely in order, and simply reflects the fact that the finance company will PAY that invoice.

There are instances of some traders, some accountants and some HMRC VAT officers, misunderstanding the position, but I assure you that all is in order.

For completeness, I am assuming that, as appears almost certain, the HP Agreement is a standard agreement, under which the “option to purchase” payment is of a nominal amount.

Basil.

Thanks (1)
Replying to fawltybasil2575:
avatar
By Sarah Nichols
19th May 2019 15:14

Yes standard HP agreement and there is no "option to purchase" amount. I appreciate your clarification Basil.

Thanks (0)
Replying to Sarah Nichols:
Psycho
By Wilson Philips
19th May 2019 17:28

If there is no option to purchase that doesn’t sound like an HP agreement to me.

Thanks (0)
Replying to Wilson Philips:
avatar
By Sarah Nichols
19th May 2019 18:53

I've bought on HP before and not had any "option to purchase" or final/balloon payment - more usual on lease contracts. Once you've paid all the HP instalments you're done and the vehicle is yours I believe.

Thanks (0)
Replying to Sarah Nichols:
Psycho
By Wilson Philips
19th May 2019 19:07

There seems to be some confusion here. A lease contract should never have an option to purchase at the end (unless it is a lease purchase contract, which is essentially an HP agreement with some subtle differences). HP agreements invariably include an option to purchase (one has the choice of returning the asset or buying it) for a nominal fee, typically £50 but sometimes as low as £10. In any event, though, the agreement should state the type of contract - if it says "Hire Purchase Agreement" at the top of the page you're good to go.

Thanks (1)
Replying to Wilson Philips:
avatar
By Sarah Nichols
20th May 2019 09:46

Yes definitely headed Hire Purchase agreement and paperwork specifically says "...regular payment structure with outright ownership of your vehicle at the end of the term" so all good I believe.

Thanks (0)
Share this content