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Where Taxpayers and Advisers Meet

VAT Refused on Chauffeur Car

Tonyp1962
Posts:1
Joined:Sun Feb 12, 2017 12:48 pm
VAT Refused on Chauffeur Car

Postby Tonyp1962 » Sun Feb 12, 2017 1:15 pm

Hi all,
Sorry this is my first post and I'm a bit nervous.

I recently became a sole trader and registered for VAT and have done everything by the book. I am a licenced PCO driver and have hire and reward insurance and only use my car for work.

But after lengthy emails with HMRC which they have all my licences for the car and myself, my invoices, my petrol receipts copies of my bank statements details of my family car absolutely everything....

But they say that they will not honour the Vat refund on my car because the Hire and reward insurance says social domestic and pleasure also and not sole business use only, I understand this is normal and every other Chauffeur I know has never had this problem reclaiming.

I am not sure what do and it's worrying me so much! I used my savings for this start up..

Can anybody help please.

greybags1
Posts:47
Joined:Tue Jan 31, 2017 10:41 am
Location:NE Scotland

Re: VAT Refused on Chauffeur Car

Postby greybags1 » Tue Feb 14, 2017 3:08 pm

The law concerning input tax recovery on cars is contained in Article 7 of the Value Added Tax (Input Tax) Order 1992. The order requires two conditions to be met - the vehicle must be used exclusively for business purposes; and it is not made available for private use. The two tests are independent and the issue of ‘availability for private use’ is very different to the test of ‘actual private use’. What you need to prove is that your intention at time of purchase is that that the vehicle is not available for private use ie there is some kind of physical or legal restriction.

As for insurance cover I am not sure you can have 'only business use' cover - there will always be SDP cover included. See Zone Contractors FTT case.

The issue is as a sole trader it is incredibly difficult to prove the car is not available for private use.

les35
Posts:635
Joined:Wed Aug 06, 2008 3:09 pm

Re: VAT Refused on Chauffeur Car

Postby les35 » Tue Feb 14, 2017 4:54 pm

If you purchased the car "to provide it on hire with the services of a driver for the purpose of carrying passengers," then input tax recovery is allowed. In my view, the private use question does not then apply. If your business is properly described by the wording (also from Article 7), then you have a good case.
DM me if you wish to pursue this further.

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: VAT Refused on Chauffeur Car

Postby SteLacca » Thu Feb 16, 2017 4:44 pm

Interesting tribunal case may be worth a read: http://financeandtax.decisions.tribunal ... C05330.pdf


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