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VAT on sale of van and then purchase of car

VAT on sale of van (as part of trade in) and purchase of a car

Client purchased a van for their sole trader business 18 months ago. Cost 15,000 + VAT = 18,000. £3,000 VAT reclaimed at time. 

They are now trading the van in and have decided to puchase a car. Trade in value offered for van is 12,000 + VAT = 14,400. Cost of car is 20,000 less trade in of 14,400.

My understanding is that they have to pay HMRC the VAT on the sale of the van so 2,400 and CANNOT reclaim VAT on the purchase of the car (unless it is 100% business use and not available for private use at all) I believe it is extremely rare for VAT to be recaimable by a sole trader on a car purchase.

Have I got this right?


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By tom123
16th Apr 2018 13:18

Yes, assuming trade is not driving school, taxi or similar.

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16th Apr 2018 13:42

No change here in the last 45 years.

It's always been like this.

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