VAT Qualifying Cars - please explain
VAT Qualifying Cars - please explain
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ATM

Original Poster:

21,472 posts

249 months

Tuesday 23rd July 2013
quotequote all
Hello

I have seen cars advertised second hand as VAT qualifying. Some of these are serious gas guzzlers. Which brings the question why bother? Surely the Benefit In Kind Tax would be so high based on the emissions and the New Price then who would want to go down this route?

The only reason I can think of is they are to be used for private high and then there is no personal tax on these. Is that right?

AndrewO

689 posts

213 months

Tuesday 23rd July 2013
quotequote all
Vat qualifying allows the finance companies to reclaim the vat. If its a pool car (no BIK) it could be financed through someone like Lombard. They take the car on as an asset and lease it back.

There are some good savings to be made but depreciation is still the biggest killer.

Lawrence5

1,254 posts

265 months

Tuesday 23rd July 2013
quotequote all
Vat qualifying cars are the 2nd hand resale of a car where the VAT was recovered on original purchase. Usually dealer demos, taxi’s, lease cars etc – nothing to do with gas guzzlers….. if you are talking company car tax – then its paid on list price/emissions calc, regardless of anything paid

In general you’d be brave to recover on a pool car as they cannot do any private miles….. so if someone used it to get the newspaper then you’re in trouble. Easier to drop the vat than police every mile frown

If you thought you were clever recovering on a Ferrari that you drive for the occasional private hire then you’ll fall down here….

Just a quirk – have to advertise a car inclusive of VAT and if there is VAT to be displayed on the invoice you need to state this.

Handy for exporters – as you can in circumstances recover the VAT e.g. export out of EEC

ATM

Original Poster:

21,472 posts

249 months

Tuesday 23rd July 2013
quotequote all
OK so if I have a limited company [vat registered] can I buy several pool cars and only use these for work purposes?

Devilstreak

8,088 posts

211 months

Tuesday 23rd July 2013
quotequote all
ATM]OK so if I have a limited company [vat registered said:
can I buy several pool cars and only use these for work purposes?
Yep, but they should officially be kept on the businesses premises if no private mileage is to be undertaken. (If the full vat is to be claimed)

Lawrence5

1,254 posts

265 months

Tuesday 23rd July 2013
quotequote all
... and log every mile to prove its all business.

ATM

Original Poster:

21,472 posts

249 months

Tuesday 23rd July 2013
quotequote all
Lawrence5 said:
... and log every mile to prove its all business.
That's easy.

AndrewO

689 posts

213 months

Tuesday 23rd July 2013
quotequote all
I think there is a benefit of setting up a separate company to handle the vat/leasing arrangement rather than using your main trading company. I'm not sure of the details.

I know of someone who has an expensive car addiction, the above is how he does it. There are savings but there's a lot more to loose in depreciation if you choose incorrectly.

DocArbathnot

29,047 posts

213 months

Tuesday 23rd July 2013
quotequote all
ATM]OK so if I have a limited company [vat registered said:
can I buy several pool cars and only use these for work purposes?
In reality you will never get away with it. lease the cars. Lease co can reclaim the VAT. they will cahge you rentals + VAT you can then reclaim 505

DocArbathnot

29,047 posts

213 months

Tuesday 23rd July 2013
quotequote all
ATM]OK so if I have a limited company [vat registered said:
can I buy several pool cars and only use these for work purposes?
In reality you will never get away with it. lease the cars. Lease co can reclaim the VAT. they will cahge you rentals + VAT you can then reclaim 505

BE57 TOY

2,628 posts

177 months

Tuesday 23rd July 2013
quotequote all
As others have said, you cannot reclaim vat on the purchase of a car unless its 100% business use.

If you were to lease a car then with personal use you can reclaim 50%