This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Charging points and VAT

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm
Charging points and VAT

Postby Curious Beast » Tue Jun 09, 2020 10:32 am

Hi all

Quick question - a client wants to install a charging point at an employee's home for their non company car. I'm clear on the benefit in kind side of things, but not the VAT side.

I'm getting mixed messages from my searches - to me, as there is no business purpose, there will be no VAT recovery possible by the company. However I have come across veiled references to such things being recoverable on the basis it is rewarding an employee.

Is there any scope for the company to recover VAT?

Thanks all

les35
Posts:596
Joined:Wed Aug 06, 2008 3:09 pm

Re: Charging points and VAT

Postby les35 » Tue Jun 09, 2020 5:48 pm

The company can recover the VAT if there is a taxable business activity. For example if a charge is made to the employee for use of the charging point.

robbob
Posts:3066
Joined:Wed Aug 06, 2008 4:01 pm

Re: Charging points and VAT

Postby robbob » Tue Jun 09, 2020 7:32 pm

Interesting thread
The company can recover the VAT if there is a taxable business activity. For example if a charge is made to the employee for use of the charging point.
les35 - are you able to clarify this answer

For example say - 50% business use and 50% private use and employee pays employer nothing - can any claim be made.

I'm getting mixed messages from my searches - to me, as there is no business purpose,
Are you saying the non company car does no business mileage whatsoever?

Apologies if i am adding to the confusion here feel free to ignore my post if that is the case :)

Trevor S
Posts:72
Joined:Tue Jan 01, 2019 12:37 am

Re: Charging points and VAT

Postby Trevor S » Tue Jun 09, 2020 10:40 pm

From a VAT perspective, I don't think that the use of the vehicle is particularly relevant to the VAT treatment of the installation. The vehicle belongs to the employee, so the only VAT that the employer is entitled to reclaim in respect of business use is the fuel element of any mileage allowance paid. And even that was challenged by Europe some years ago, on the basis that the fuel supplier's supply was more likely to be made to the employee. This led to the current requirement for employees to retain fuel receipts.

However, back to the question! If the employer contracts for the work to be carried out, and then makes a charge to the employee, the employer becomes a step in the supply chain. The installer supplies services to the employer, and the employer supplies services to the employee. The employer can reclaim input tax, because they are making that onward taxable supply. Theoretically, the charge made to the employee could be less than the cost to the employer. Although if the charge to the employee was too negligible, HMRC might not consider it to be a business activity, which would then prevent the input tax recovery.

Without a charge to the employee, it's hard to see what business activity the installation could be attributable to, so input tax recovery becomes unlikely.

As for the "rewarding the employee" angle - perhaps this is derived from the employee entertainment rules in section 3 of notice 700/65? If so, that relates specifically to "events", so doesn't really apply here.

I realise this is a VAT forum - but remember that if the employer bears some or all of the cost of these works, there may well be a taxable benefit to the employee, which would be reportable on the P11D.

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm

Re: Charging points and VAT

Postby Curious Beast » Wed Jun 10, 2020 7:44 am

Thanks all, I'll have a chat with the client.

And I realise there is a P11D angle Trevor, that's why I mentioned it at the top of my post ;) But always happy to have people remind me of things I had already thought of, better than not reminding me of things I haven't thought of!

Oh, and thanks for explaining things all, my VAT has become rusty but I am looking to knock said rust off, so I intend to frequent here more. If you see me saying anything daft please do correct me, but gently :)


Return to “VAT & Excise Duties”