VAT Qualifying Car - Better Appreciation

[FMCG]

Nearly bought a Discovery Commercial and tempted to fit seats - but too risky.

So thought that would explore an alterantive avenue, seems unviable given the views of posters.

So..................may just have to buy a "Duke" upon which to travel to clients.

[northernladuk]

I'd guess this raft of company car questions comes because Contractor Weekly has a load of crappy articles from some car leasing company on their site. All of them are really poorly disguised sales patter with lots of comments about it being more attractive but absolutely nothing on the numbers. I would be extremely cautions if a car leasing company is trying to tell us that it's becoming attractive for contractors.

There is even an article on how to look after your car over winter from Oct 2015 on the front page

Contractor News - Tax & IR35 News - Contractor Weekly

Pretty poor show TBH.

[LondonManc]

In short, nice try, try again.

Probably not what you wanted to hear but Kenny has nailed it as far as I recall.
I looked into similar last year when changing vehicles and just went with a personal purchase in the end. Better flying under the radar imho as if HMRC catch you on this, they'll see you as low hanging fruit for the rest of your activities.

[Lance]

Either get a company car and pay the BIK or get a proper commercial vehicle (van or pick up). All else is likely to ring alarm bells with mr tax.

[ContrataxLtd]

Generally a VAT qualifying car is one on which VAT has been charged at each sale made during it's life cycle i.e. everyone who's bought the car has been able to reclaim the VAT on it and then has charged VAT when sold on (it can't have been bought/sold under the margin scheme) so assuming it does correctly have VAT chargeable on it this could be reclaimed.

However, under the circumstances you've descried I think you'd be hard pushed to either reclaim the VAT or not have a BIK. Unless your business is directly related to driving, cars etc. (think taxi drivers, car sales etc.) then the car would have to be classed as a pool car and used for business 100% to enable a VAT reclaim and avoid a BIK. For a typical contractor both of these are highly unlikely and therefore probably not a viable option.

Martin
Contratax Ltd

[Fred Bloggs]

[QUOTE=Kenny@MyAccountantFriend;2256547]Unless your business is the business of driving such as a taxi, vat would not be reclaimable on the purchase.

If tge car is also kept overnight at a private residence a BIK should apply in most cases as it is available for personal use.[/QUOTE]
(My emphasis) I tried this a while ago and was told that even if the car was parked at the airport and I was abroad, the car was still available for use and therefore, subject to BIK.

[Kenny@MyAccountantFriend]

Unless your business is the business of driving such as a taxi, vat would not be reclaimable on the purchase.

If tge car is also kept overnight at a private residence a BIK should apply in most cases as it is available for personal use.

[FMCG]

Searched but still unclear.....

If purchase a preowned car (not van, commercial, etc) through a bonafide dealer, who issues and states "VAT Qualifying" and shows it clearly on the invoice. Assume that I can then (re)claim the VAT. Appreciate that I would have to charge VAT when I sell a few years down the line ie owe the VAT element to the HMRC.

Intend to use it solely for business use ie drive to the client (Monday morning) and then from client to hotel and at end of week on Friday return home. Would park up the car at "home" until drive back to client on Mondays, whilst using my personal car at weekends. Guess this would satisfy the HMRC?

Making the assumption

• that their will be no BIK to pay as car is used solely for buiness (what about the potential "fly in the ointment" over hotel and back to client site?)
• all car expenses can be put through the business
• can still bill the client 45p/mile but not (personally) reclaim

Do the "well informed" think this is allowable (yes will also be asking the accountant). My key concern is that the vehicle will be parked at home.