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Where Taxpayers and Advisers Meet

PCP vs lease

Yiannis17
Posts:114
Joined:Wed Aug 06, 2008 3:43 pm
PCP vs lease

Postby Yiannis17 » Tue Jun 28, 2022 10:17 am

Morning

Just had someone approach me to move over where he has ordered a new car for his chauffeuring business under a PCP - personal contract purchase but his accountant is treating it as a lease so that he claims back the vat. The car is handed back at the end of the 3 year term and apparently there is HMRC approval on this. I think this is absurd and a blatant infringement of the rules. Am I missing something here?

pawncob
Posts:4917
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: PCP vs lease

Postby pawncob » Tue Jun 28, 2022 11:46 am

It's a minefield. Without reading the contract it's hard to say.
With a pinch of salt take what I say, but don't exceed your RDA

robbob
Posts:3221
Joined:Wed Aug 06, 2008 4:01 pm

Re: PCP vs lease

Postby robbob » Tue Jun 28, 2022 1:01 pm

There are specific anti avoidance rules in place to reclassify purchases (hp) as leases or the other way round - generally i susspect that obligation is more to stop the leasing companies pimping the system than anything else


I tend not to comment until i have seen the paperwork confirming whether the ongoing monthly payments ane "rentals" + vat (lease) or whether the documentation simply mentions finance fees and their is apukka hp type agreement - ie i go less by the wording used and more by the facts of the matter as to what the documentation says. I remember years back seeing case where vat invoice for van had led someone to presume it was purchase on hpo when in reality paperwork confirming it was leasing payments plus vat.

If its known that vehicle will be handed back could it be the fact that paperwork simply confirms its lease payments plus vat each month in which case its not a purchase despite whjat the wording used may have been !

Yiannis17
Posts:114
Joined:Wed Aug 06, 2008 3:43 pm

Re: PCP vs lease

Postby Yiannis17 » Tue Jun 28, 2022 1:30 pm

Thank you both very much.


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