VAT Question - contract hire
VAT Question - contract hire
Author
Discussion

rufmeister

Original Poster:

1,498 posts

153 months

Monday 9th March 2015
quotequote all
We are registered for flat rate VAT, meaning we can't claim VAT back on any purchases under £2000.

Looking at getting a new van on contract hire, will I be able to claim back the monthly VAT element of the payments?

Had a couple of different answers from different brokers, which sounded a bit woolly.

Super Slo Mo

5,374 posts

229 months

Monday 9th March 2015
quotequote all
I would say no, but your accountant will give you the definitive answer.

Eric Mc

125,855 posts

296 months

Monday 9th March 2015
quotequote all
The £2,000 relates to "Capital Purchases".

Is there a "Capital Purchase" with a Contract Hire?

rufmeister

Original Poster:

1,498 posts

153 months

Monday 9th March 2015
quotequote all
Eric Mc said:
The £2,000 relates to "Capital Purchases".

Is there a "Capital Purchase" with a Contract Hire?
As its a hire, I am guessing not.

Eric Mc

125,855 posts

296 months

Monday 9th March 2015
quotequote all
Under a Contract Hire you are not buying anything - you are hiring a service i.e. access to someone else's asset - in this case, a van.

As you can see, the treatment of a Hire Purchase is quite different.

As per the relevant VAT note -

15.4 What counts as goods and services?
A van leased/hired to your business, counts as one continuous supply of services, as ownership will never transfer to your business.
A van bought on hire purchase is a supply of capital expenditure goods because ownership will eventually transfer to your business. If this cost £2,000 or more (including VAT) then input tax can be claimed.

rufmeister

Original Poster:

1,498 posts

153 months

Monday 9th March 2015
quotequote all
Eric Mc said:
Under a Contract Hire you are not buying anything - you are hiring a service i.e. access to someone else's asset - in this case, a van.

As you can see, the treatment of a Hire Purchase is quite different.

As per the relevant VAT note -

15.4 What counts as goods and services?
A van leased/hired to your business, counts as one continuous supply of services, as ownership will never transfer to your business.
A van bought on hire purchase is a supply of capital expenditure goods because ownership will eventually transfer to your business. If this cost £2,000 or more (including VAT) then input tax can be claimed.
Thanks Eric, back to the drawing board/calculator it is then!

surveyor

18,705 posts

215 months

Monday 9th March 2015
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It was a good question, and one I had been meaning to ask as well. Disappointing answer mind.... smile

sumo69

2,164 posts

251 months

Monday 9th March 2015
quotequote all
And its one I have just answered in the same way for a client of mine...

David

KarlS

80 posts

205 months

Tuesday 10th March 2015
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If you do decide to proceed with Contract Hire for a van i'd be more than happy to quote, just send me a PM smile