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VAT recovery and benefit in kind on private cars

It's possible but very hard

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In a case reported here, the taxpayer won the right to recover input tax on company cars.  http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11273/TC07313.pdf

The taxpayer succeeded in arguing that the vehicles were not available for private use

- the drivers had comparable cars of their own;

- their contracts of employment explicity prohibited private use of company vehicles

- the keys were kept in a safe to which only the director had access

- there were mileage records showing that substantially all of the usage could be accounted for by business trips.

As this was a VAT appeal, benefit in kind charge wasn't within scope but I think the same rationale would carry the day.

So there you have it.  Anyone that wants to recover input tax and avoid bik charge just has to make sure that the cars really really aren't available for private use.

 

Replies (2)

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RLI
By lionofludesch
07th Sep 2019 11:20

I think we've always accepted it was possible.

But unlikely.

Well done to this trader, though.

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Psycho
By Wilson Philips
07th Sep 2019 11:43

It’s not that difficult, although I agree unusual. We managed to successfully argue for input recovery without recourse to the Tribunal. (Although the circumstances were a little different to this case and concerned pool cars, so the BIK issue was not in point).

But yes it is possible to avoid a BIK - I can’t recall the name of the case. It would seem though that that is more of a high jump than a hurdle to get over.

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