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Where Taxpayers and Advisers Meet

Capital allowance on two vehicles

FTM
Posts: 4
Joined: Tue Feb 25, 2014 7:52 am

Capital allowance on two vehicles

Postby FTM » Tue Feb 25, 2014 8:06 am

I'm a self employed carpenter (sole trader) and I'm currently being investigated by the tax man. I've claimed capital allowance on two vehicles, a van and a motor cycle but the tax man says I can only do this for one. I thought two different types of vehicle could be claimed for as I seem to remember this was first allowed about 5 years ago. The bike is used when I'm working somewhere like central London to save on parking charges and journey times. As the bike is used 50/50 between work and private mileage I used 50% of servicing costs etc. and 95% for the van as it's used 99% for work. I use the wifes car for private use.
Can I claim for 2 vehicles?

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Capital allowance on two vehicles

Postby King_Maker » Tue Feb 25, 2014 9:35 am

You can claim for any number of vehicles, if they have business use.

I assume you have maintained mileage logs in support of the business journeys?

FTM
Posts: 4
Joined: Tue Feb 25, 2014 7:52 am

Re: Capital allowance on two vehicles

Postby FTM » Tue Feb 25, 2014 6:23 pm

I didn't keep mileage logs but I kept all petrol receipts and the time and date of these receipts confirms when I used the bike for work.
The tax man is saying that as I'm claiming 95% business use for the van then that only leaves me with a maximum of 5% business use for the bike, so I can only claim for 5% of the cost of bike servicing etc. Surely if the bikes mileage is split 50/50 between private/business use then I could claim 50% of the service costs irrespective of how much the van is used.

robbob
Posts: 2769
Joined: Wed Aug 06, 2008 4:01 pm

Re: Capital allowance on two vehicles

Postby robbob » Tue Feb 25, 2014 7:45 pm

The tax man is saying that as I'm claiming 95% business use for the van then that only leaves me with a maximum of 5% business use for the bike, so I can only claim for 5% of the cost of bike servicing etc. Surely if the bikes mileage is split 50/50 between private/business use then I could claim 50% of the service costs irrespective of how much the van is used.
Yes - not sure where the tax man is coming from here - simply ask him to point you to the legislation that says you can't claim for using multiple vehicles within the business as per % business use of each vehicle independently of the other . I can't believe they would be that stupid that he would think 60% business use of each would amount to 120% and therefore be over 100% - if they take that silly line of reasoning ask for another officer to review their line of reasoning.

Obviously the main issue here where the taxman can play hardball is if he doesn't believe your business / private splits for use of vehicles - from now on keep full log of business miles in each vehicle with overall mileage so you can aportion 100% factual splits between business and private use. A sample log for 3 months may even be a useful defence if they are trying to add in too much private use - although current use doesn't mean previous use was the same - so checking back through job diaries may be the best deference if you say 50% business use bike and he says i will only accept 25% without proof.

FTM
Posts: 4
Joined: Tue Feb 25, 2014 7:52 am

Re: Capital allowance on two vehicles

Postby FTM » Wed Feb 26, 2014 7:39 am

Thanks, I'll try to talk to him later today on the phone. I'm worried about him taking a hard line as well that's why I asked here first as I didn't want to speak to him without being 100% certain I was correct.

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Capital allowance on two vehicles

Postby King_Maker » Wed Feb 26, 2014 9:55 am

Without the mileage Logs, the fuel receipts are not that useful.

However, you should be able to construct such a Log(s) to support your claim to Capital Allowances from the relevant receipts.

I assume it is not advantageous to claim HMRC's Approved Mileage rates (45p/25p/24p) + finance interest instead of the % of the actual costs (insurance, repairs etc)

FTM
Posts: 4
Joined: Tue Feb 25, 2014 7:52 am

Re: Capital allowance on two vehicles

Postby FTM » Fri Feb 28, 2014 6:33 pm

I spoke to the tax man today and he's adamant he's right. In his words "how can you expect to claim 50% business usage for the bike when you've already claimed you use your van 95% of the time for your business, you can only drive one vehicle at a time ". I can't see any point arguing any more as he'll only come down harder or go back more than the 2 years he's already investigating.
Maybe because I did my own self assessment he knows I'm no accountant and thinks he can bully me, he's right :( .

bd6759
Posts: 3072
Joined: Sat Feb 01, 2014 3:26 pm

Re: Capital allowance on two vehicles

Postby bd6759 » Fri Feb 28, 2014 11:12 pm

The taxman's reasoning is illogical and wrong. He clearly does not understand simple mathematics.

Your problem is that you are on dodgy ground. You say that you use the bike 50/50, but have no records to show that. You say that you need a van, yet you manage on a bike. If the van is for carrying tools, how do you carry them when you are a bike?

You need to spend some time to reconstruct your business travel and compare that to the total miles travelled per the odometers. That is the only way to show what the business miles are. Once you have that, put your proposals to the taxman. It might be that 95% and 50% are correct, it might be something else. If he still disagrees that the two amounts can add up to more than 100%, tell him that you have a saw and 10 screwdrivers that are each used 100% for business. Ask him if that means your tools are 1100% for business? If he can't see sense, ask to speak with his manager who hopefully has a better grasp of maths.

Lambs
Posts: 1418
Joined: Wed Aug 06, 2008 3:15 pm

Re: Capital allowance on two vehicles

Postby Lambs » Mon Mar 03, 2014 3:27 pm

Sorry, it took me a while to get around to posting because I was laughing too much.

The critical point to convey to this mathematically challenged individual is that it matters not how little or how much any asset is used but how much so for business purposes: it is the proportion which counts. Say I have 5 vans, I christen Monday, Tuesday, Wednesday... and I use them only on the allotted day and only for business purposes. Have I used 500% of my eligible allowances? No. When you are claiming 95% business use, you are effectively saying that, whenever you use that vehicle, 5% of the journeys are non-business. The motorbike 50% of the time it is actually used. If you took the bike out only 60 times a year but 30 journeys were business-related, then half of your costs would be eligible.

You do need to be able to justify your business use. One might wonder what carpentry tools could be carried on a bike. (This practical issue doesn't stop you from using your bike to visit your accountant, solicitor or website designer or stationer - unless perhaps you came to pick up a filing cabinet). But I note that there are several city-centre car parks with height restrictions or similar where using a van would be impractical. Perhaps this is where a smaller vehicle comes into its own. I trust you attend each visit to the taxman on your bike, complete with leathers and a winning smile.

We must always assume that you are conveying the logical thrust of the HMRC officer's contention with sufficient accuracy. I almost hope, for his or her sake, that you are not. Beware that he or she is always entitled to come back with another reason, or reasons, why they think you cannot have the relief you've claimed.

Regards,

Lambs


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