The VAT treatment of cars or vans are quite different so beware. If it’s a car then:
- Input tax cannot be recovered on the purchase unless the business operates as a car-hire firm or a driving school or if you are a taxi driver. Please also remember that where the car is so much as available for private use then this will prevent you from reclaiming the input tax.
- If it’s been bought on a lease hire agreement where VAT is charged on the monthly instalments paid to the leasing company then 50% of the tax can be reclaimed.
- You can reclaim the tax on all fuel as long as you declare VAT on the private element of the motoring and this is done through the Fuel Scale charge adjustment on each VAT return. Alternatively just do not reclaim any of the VAT on the fuel bills if that is more beneficial for you.
- You can claim tax on all maintenance costs as the vehicle has to be roadworthy and safe in any event.
- Be wary about treating cars as vans and in particular, a double pick-up needs to have a physical payload of 1 tonne or more to be classed as a van.
VAT - correcting Errors
Under the recent new rules an error can only be corrected if it originally happened within the last four years.
