VAT on a Used Van Purchase

[boatman]

The new business is ticking over quite nicely and, having successfully navigated the first two VAT Returns, I feel I'm beginning to get a grip on the finances (in a purely amateurish and fumbling sort of way...). The third VAT return coming up though, and I've complicated matters with the necessary purchase of a used van. The cost was £7790 + VAT (£1558). I have paid the £1558 up front, and the remainder will be paid off over a period of 48 months at £212.07/month (giving a total outlay of £11737.36). The question bothering me is at what point should I claim back the £1558 VAT? Having apparently paid it up front, should I claim it on the next Return, or spread it over the repayment period?

[Generix]

The new business is ticking over quite nicely and, having successfully navigated the first two VAT Returns, I feel I'm beginning to get a grip on the finances (in a purely amateurish and fumbling sort of way...). The third VAT return coming up though, and I've complicated matters with the necessary purchase of a used van. The cost was £7790 + VAT (£1558). I have paid the £1558 up front, and the remainder will be paid off over a period of 48 months at £212.07/month (giving a total outlay of £11737.36). The question bothering me is at what point should I claim back the £1558 VAT? Having apparently paid it up front, should I claim it on the next Return, or spread it over the repayment period?

Presumably what has actually happened is you have paid off the supplier of the van 100% of the amount owed, by taking out a loan with an associated finance company?

Or has the actual seller of the van arranged this monthly payment schedule?

[boatman]

Yes, thats correct (checking through the agreement), the supplier has been paid in full, and the van is now the property of the finance company until I've paid off the outstanding loan. Presumably then, as far as HMRC is concerned, I have actually forked out the full amount and therefore should claim back the VAT immediately?

[Generix]

Yes, thats correct (checking through the agreement), the supplier has been paid in full, and the van is now the property of the finance company until I've paid off the outstanding loan. Presumably then, as far as HMRC is concerned, I have actually forked out the full amount and therefore should claim back the VAT immediately?

Correct. (providing it qualifies as a commercial vehicle and is therefore fully recoverable )

[boatman]

Well, that seems straightforward... thank you Generix! The van does qualify as a commercial vehicle (and will look luverly with the company logo painted on when I get around to doing it!), so I can go ahead and start working on the Return.