Flat rate VAT scheme - business car lease possible?

[hallion]

I'm a sole trader and the business is on the flat rate VAT scheme. Business use of a car is minimal, probably 10%. Would I be eligible for any type of business car lease which doesn't have VAT added (not claim VAT back as this isn't possible on flat rate scheme)? I don't want to get on the wrong side of HMRC BTW

[ModernAndy]

ANY personal use of car immediately reduces the VAT reclaim to 50% (unless the rules have changed in the last couple of years) so I think the answer is since you won't be able to reclaim just half then you will be paying all the VAT.

[Eric Mc]

Is the OP trying to assert that because he is on the VAT Flat Rate Scheme he can encourage a leasing company to not charge VAT on the lease charges?

The supplier will always charge whatever VAT is appropriate for the goods or services they are selling - irrespective of the VAT status of the customer, except in certain limited circumstances. Being on Flat Rate VAT is not one of those circumstances.

[hallion]

Thanks guys, that's good to know.

[ModernAndy]

Is there any way you can do it on a commercial vehicle like a pickup or is VAT reclaim just impossible on the scheme you're on? The only VAT experience I have is on the usual pay on what you sell and reclaim on what you buy..

[Eric Mc]

If you are on the Flat Rate Scheme you CAN reclaim Input VAT on capital expenditure over £2,000. So, you COULD get VAT back on the purchase of a commercial vehicle =- but it have to be

bought outright
bought on bank loan/finance
bought using an HP

Leasing an asset is not looked on as a capital acquisition. It's a form of rental.

The downside of reclaiming VAT on the purchase of capital goods when under the Flat Rate Scheme is that when the asset is eventually sold, Output VAT must be declared at the full VAT rate on the sale of the item, not using the Flat Rate percentage you use for your normal sales.

[KevinCamaroSS]

Since your business use is so limited why not use your own car and claim the 45/25p per mile as allowed by HMRC?