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VAT Treatment

VAT Treatment on Vehicles Purchased and then leased out

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I have a client who is purchasing electric vehicles outright and then going to lease them out to customers.  What is the VAT treatment?

  1. On the purchase of the vehicles can my client claim the VAT back on this purchase?
  2. Charging VAT - My client is going to be charging VAT to his customers for leasing the vehicles and paying this across in the usual routine process.
  3. The customers who are leasing the vehicles - do the recover 50% of the vat or full recovery?

Any guidance, links or assistance welcomed.

 

Thanks

Replies (11)

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By paul.benny
01st Jul 2021 09:02

Have you tried looking at VAT 700/64?

Thanks (1)
Replying to paul.benny:
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By Danny_C
01st Jul 2021 09:23

Will take a look thanks

Thanks (1)
chips_at_mattersey
By Les Howard
01st Jul 2021 09:27

1. yes
2. yes
3. it depends - don't fall into the trap of offering your customers VAT advice!

Thanks (1)
Replying to leshoward:
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By Leywood
01st Jul 2021 09:34

[quote=leshoward] ''3. it depends - don't fall into the trap of offering your customers VAT advice!''

Many of the website do, very badly imo. So agree totally and not just for that reason.

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Replying to leshoward:
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By Danny_C
01st Jul 2021 09:40

Les - does this contradict your answers to point 1?

3.1 Recovering the VAT charged on buying, importing or acquiring a car
As a general rule, you cannot recover the VAT on the purchase.

But if you buy, import or acquire one of these excepted cars, you may recover VAT in full.

These are a car which:

is a stock in trade of a motor manufacturer or dealer
is intended to be used primarily as a taxi, driving instruction car, or self-drive hire
will be used exclusively for the purposes of your business and would not be made available for the private use of anyone

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Replying to Danny_C:
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By Bobbo
01st Jul 2021 10:31

The cars are being leased out to customers so they're being used exclusively for the purpose of your client's business and won't be available for the private use of anyone, right???

Or does the director (or any other employee or the company) intend to use a car personally when its not on lease...

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Replying to Bobbo:
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By Danny_C
01st Jul 2021 11:12

They will be used for private usage too

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Replying to Danny_C:
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By Hugo Fair
01st Jul 2021 11:31

Why do people (whether you or your client in this case) feel that omitting to state the underlying objective means that it's not relevant ... despite it often turning all the answers gleaned so far on their head?

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Replying to Hugo Fair:
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By Danny_C
01st Jul 2021 12:08

Not sure but thank you for your valuable input !

Thanks (0)
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By Leywood
01st Jul 2021 09:28

What conclusion have you come to so far?

I would have thought someone who will need to jump through several hoops to be in a regulated sector would be prepared to get some paid for advice from a VAT expert on this subject.

Why does (3) matter? Is he planning on giving tax advice to his clients?

Thanks (3)
Jason Croke
By Jason Croke
01st Jul 2021 11:27

Are the customers connected (corporate, family, etc) to the entity leasing the vehicles?
https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit64680 (Tamburello case)

As Les has posted, what the customer can and cannot do is their problem.

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