new car - can i claim VAT?


K

kevin bailey

Hi,

I bought a new-ish car because my accountant said it would be tax efficient
and we needed to upgrade the car anyway.

I bought it from a dealership - and the invoice says 6300.00 inc VAT.

Can I claim the VAT? - the dealership said no when I picked the car up.

What is the situation with VAT when bought from a dealership.

BTW - I am a sole trader.

Thanks,

Kevin
 
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D

DoobieDo

kevin bailey said:
Hi,
gud'ay,

I bought a new-ish car because my accountant said it would be tax
efficient
and we needed to upgrade the car anyway.
he said, you did..
I bought it from a dealership - and the invoice says 6300.00 inc VAT.
a talking invoice?
Can I claim the VAT? - the dealership said no when I picked the car up.
he said, you didn't.. sorry to hear that you've got learning difficulties.

What is the situation with VAT when bought from a dealership.
same as anywhere else, the government gets it eventually.
BTW - I am a sole trader.
how exciting for you, how's things going in the sole trade?
or maybe you missed a s
 
K

kevin bailey

kevin said:
Hi,

I bought a new-ish car because my accountant said it would be tax
efficient and we needed to upgrade the car anyway.

I bought it from a dealership - and the invoice says 6300.00 inc VAT.

Can I claim the VAT? - the dealership said no when I picked the car up.

What is the situation with VAT when bought from a dealership.

BTW - I am a sole trader.

Thanks,

Kevin
The bit I don't understand is that I've been charged VAT - so what happens
to the VAT I have paid to the dealership?

Kevin
 
T

Troy Steadman

kevin said:
The bit I don't understand is that I've been charged VAT - so what happens
to the VAT I have paid to the dealership?

Kevin
Assuming you are VAT registered:

NEW
1) When you buy a new car you cannot recover the VAT, unless you are a
car dealership, or a taxi firm etc.

When you later sell the car you do not add VAT.

2) When you buy a new van you *can* recover the VAT.

When you later sell the van you must add VAT

SECOND HAND or PRE-CHERISHED
3) When you buy a used van, if there is VAT on it you can recover the
VAT.

4) When you buy anything under a second hand margin scheme - be it
antiques, cars or vans - you will be charged VAT which you cannot
recover.

You are in category 4 and you cannot recover the VAT, which has been
paid to HMCR.
 
T

Troy Steadman

Troy said:
4) When you buy anything under a second hand margin scheme - be it
antiques, cars or vans - you will be charged VAT which you cannot
recover.
Except that vans, being "plant", are not in a second hand margin
scheme.
 
K

kevin bailey

Troy said:
Assuming you are VAT registered:
Yes I am VAT registered.

NEW
1) When you buy a new car you cannot recover the VAT, unless you are a
car dealership, or a taxi firm etc.

When you later sell the car you do not add VAT.

2) When you buy a new van you *can* recover the VAT.

When you later sell the van you must add VAT

SECOND HAND or PRE-CHERISHED
3) When you buy a used van, if there is VAT on it you can recover the
VAT.

4) When you buy anything under a second hand margin scheme - be it
antiques, cars or vans - you will be charged VAT which you cannot
recover.

You are in category 4 and you cannot recover the VAT, which has been
paid to HMCR.

Thanks for that - so I take it that the dealership has already handed the
VAT over to the HMCE?

Thanks again for the clarification.
 
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T

Troy Steadman

kevin said:
Yes I am VAT registered.




Thanks for that - so I take it that the dealership has already handed the
VAT over to the HMCE?
Not necessarily.

Dealerships often try to "jiggle" the VAT. They ideally want £nil
margin on their Used Car Sales ( = £nil VAT), which means high Part
Exchange values, which in turn keeps New Sales Prices high, so they
meet their targets quickly, achieve manufacturers' bonuses, and keep
their dealership.

But...oops!... they now have to pay more Output VAT on their New Sales,
so they'd rather give you a low part exchange but heavily discount your
new car! That is why you tend to get "departments", businesses within
businesses, keeping the cars swirling around where nobody can fix them
with a definitive "price".
 
F

Fred

kevin bailey said:
Hi,

I bought a new-ish car because my accountant said it would be tax
efficient
and we needed to upgrade the car anyway.

I bought it from a dealership - and the invoice says 6300.00 inc VAT.

Can I claim the VAT? - the dealership said no when I picked the car up.

What is the situation with VAT when bought from a dealership.

BTW - I am a sole trader.

Thanks,

Kevin
Your accountant should have given you advice to start a new leasing company.
If that company had bought the car it could have reclaimed VAT and leased
the car to yourself for a suitable amount.

You could then reclaim the VAT element of the lease cost.

QED
IANAA
 
J

Jonathan Bryce

kevin said:
I bought a new-ish car because my accountant said it would be tax
efficient and we needed to upgrade the car anyway.

I bought it from a dealership - and the invoice says 6300.00 inc VAT.

Can I claim the VAT? - the dealership said no when I picked the car up.
You can't.
What is the situation with VAT when bought from a dealership.
Same as buying it from anywhere else, you can't claim it.
 
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S

Stevieh

Your accountant should have given you advice to start a new leasing company.
If that company had bought the car it could have reclaimed VAT and leased
the car to yourself for a suitable amount.
Your accountant should have for his sake!!! at best you will get back
£938 VAT as a one off reclaim and a £1,500 fee paid over to the
accountant for the leasing company (+VAT of course!).

Should consider other factors as well, how many miles are you expecting
to do? two figures are best one for business miles and one for private
miles. What are the emissions of the vehicle because this will affect
the benefit you receive.
You could then reclaim the VAT element of the lease cost.
So, sole trader pays VAT inputs of (say) £17.50 on net charge of £100
to leasing company, leasing company pays £17.50 outputs to HMRC (less
the VAT on the extra accountancy fees incurred).

Nice idea but v. complicated and does not consider the interaction of
taxes. The new "company" would have to be a different strcture tot he
sole trader, either a partnership or a Ltd Co as the revenue will just
deem 2 trades from 1 sole trader as 1 VAT regitration litereally
seeling your own stuff to your self instead of weirdly selling it to
yourself.

You must dicuss this with your accountant, but its generally cheaper to
keep cars outside the business and claim 40p for every mile travelled
on business up to 10k milles then 25p (or is it 15p?? - sorry its
late!!). Forget any tax breaks as they do not really exist.

I haven't even touched on what happens if the HMRC wiev this as tax
avoidance.
Don't really see how
 

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