VAT and vehicle insurance claim
Discussion
A couple of months ago I was hit by an uninsured driver, who then fled the scene. I got his reg plate and reported it to plod, who say it can take up to 6 months to investigate. All they've told me so far is that the vehicle is registered to a keeper with a Northern Ireland address (could be legit, but we are about as far away as it's possible to be from NI, and he was well off the beaten track of a tourist).
I've had to claim to get my vehicle (double cab pick up) repaired, which has come out of my insurance. I've paid the excess, and according to my insurance co it's classed as an 'at fault' claim, so I'm probably going to get reamed at renewal time as well. It's needed the whole of one side respraying, new front wing and rear quarter, and a few other parts, and I had it repaired at the main dealership where I bought it, as they are the only manufacturer approved bodyshop within 150 miles.
Anyway, I collected the vehicle yesterday, and was presented with a bill for the insurance excess (I had been expecting to pay this via my insurance company, but no matter). Then they gave me a bill for the VAT on the repairs, for me to pay. This invoice has zero sale value, and just the approx £1000 VAT for the repair job. The dealer is expecting me to pay the VAT and reclaim it through my limited company. Not what I was expecting and isn't a massive issue, but I've just started a new VAT quarter, so it's going to be 3 months before I effectively get that back.
The situation is: my name is on the V5 as registered keeper, and the legal owner is the leasing company, as there is still finance outstanding. The finance contract is not in my personal name, but with my limited company which is VAT registered. As well as being the registered keeper, the insurance policy is in my name (with business use obviously), rather than my limited company.
The invoices from the dealership are all addressed to me personally, and don't have my business name on (although they say it's no issue to amend those), although my home address is also the VAT registered address of my company. I'm not sure if it's the insurance company of the bodyshop/dealer that's decided I need to pay the VAT. I guess if I was self employed and VAT registered personally that would be a bit more straight forward.
So is it right that I'm being asked to pay the VAT here? I appreciate that the insurance co can't reclaim the VAT, and the only hope of doing so is through my VAT registered ltd co, but will the VAT man be happy with that, if he ever picks up on it? Paying it will hit my cash flow a bit, it should be manageable, but potentially my company could have had to borrow the money to pay this lump of VAT, which doesn't seem entirely fair.
I've had to claim to get my vehicle (double cab pick up) repaired, which has come out of my insurance. I've paid the excess, and according to my insurance co it's classed as an 'at fault' claim, so I'm probably going to get reamed at renewal time as well. It's needed the whole of one side respraying, new front wing and rear quarter, and a few other parts, and I had it repaired at the main dealership where I bought it, as they are the only manufacturer approved bodyshop within 150 miles.
Anyway, I collected the vehicle yesterday, and was presented with a bill for the insurance excess (I had been expecting to pay this via my insurance company, but no matter). Then they gave me a bill for the VAT on the repairs, for me to pay. This invoice has zero sale value, and just the approx £1000 VAT for the repair job. The dealer is expecting me to pay the VAT and reclaim it through my limited company. Not what I was expecting and isn't a massive issue, but I've just started a new VAT quarter, so it's going to be 3 months before I effectively get that back.
The situation is: my name is on the V5 as registered keeper, and the legal owner is the leasing company, as there is still finance outstanding. The finance contract is not in my personal name, but with my limited company which is VAT registered. As well as being the registered keeper, the insurance policy is in my name (with business use obviously), rather than my limited company.
The invoices from the dealership are all addressed to me personally, and don't have my business name on (although they say it's no issue to amend those), although my home address is also the VAT registered address of my company. I'm not sure if it's the insurance company of the bodyshop/dealer that's decided I need to pay the VAT. I guess if I was self employed and VAT registered personally that would be a bit more straight forward.
So is it right that I'm being asked to pay the VAT here? I appreciate that the insurance co can't reclaim the VAT, and the only hope of doing so is through my VAT registered ltd co, but will the VAT man be happy with that, if he ever picks up on it? Paying it will hit my cash flow a bit, it should be manageable, but potentially my company could have had to borrow the money to pay this lump of VAT, which doesn't seem entirely fair.
Simpo Two said:
So... if you're not VAT registered (ie Joe Public) the insurance companies pay out gross, and if you are, they pay net?
Yeah, because you can claim the VAT back as a VAT registered company. If you take 'cash in lieu' instead of getting the vehicle repaired, they will also pay you the repair quote less the VAT regardless.
If the insurance is in your name then I don't see why your limited company is involved at all. Some people appear to think that owning a limited company means you never have to pay VAT on anything, unfortunately HMRC doing see it that way.
If it's a personal insurance policy, paid for by you and in your name, and the original invoices were made out to you, then I don't think your company should pay the VAT. If it goes wrong your company will have to deal with HMRC, why take the risk just to save the insurance company some money?
Edited to add, if you're not declaring it as a company car and are just claiming mileage then you don't really want to add any doubt as to whether it is or isn't a company car. If it isn't a company car then I don't think you are entitled to reclaim any VAT on what is essentially a personal transaction, if it is a company car then the insurance should be in the company name not yours.
If it's a personal insurance policy, paid for by you and in your name, and the original invoices were made out to you, then I don't think your company should pay the VAT. If it goes wrong your company will have to deal with HMRC, why take the risk just to save the insurance company some money?
Edited to add, if you're not declaring it as a company car and are just claiming mileage then you don't really want to add any doubt as to whether it is or isn't a company car. If it isn't a company car then I don't think you are entitled to reclaim any VAT on what is essentially a personal transaction, if it is a company car then the insurance should be in the company name not yours.
Edited by RYH64E on Sunday 12th June 09:04
RYH64E said:
If the insurance is in your name then I don't see why your limited company is involved at all. Some people appear to think that owning a limited company means you never have to pay VAT on anything, unfortunately HMRC doing see it that way.
The lease is in the name of his VAT registered company though.PurpleMoonlight said:
RYH64E said:
If the insurance is in your name then I don't see why your limited company is involved at all. Some people appear to think that owning a limited company means you never have to pay VAT on anything, unfortunately HMRC doing see it that way.
The lease is in the name of his VAT registered company though.Edited by RYH64E on Sunday 12th June 09:31
PurpleMoonlight said:
The OP may reclaim the cost of the insurance from his business.
Maybe he does, more likely he claims mileage at approved rates and uses that money to cover the costs of fuel/insurance/maintenance. Regardless of how he reclaims the costs from his company it seems clear that the insurance policy is a private policy, in his name not the company's, that the OP is the policyholder not his company, and that the invoices from the garage have been made out to him personally. The OP as policyholder can't reclaim the VAT because he's not VAT registered, his company can reclaim the VAT but only on invoices issued to them, for expenses incurred wholly and exclusively for the purposes of trade. If the car hasn't been declared as a company car, the insurance is a private policy not a company policy, and the invoices have been correctly made out to the policyholder, then I don't see how the VAT registered company can legitimately reclaim the VAT. Nor do I see why the OP should take the risk.PurpleMoonlight said:
He can't reclaim mileage as it's a company vehicle and not his.
The insurance company appear to know it's a company vehicle and that the company is VAT registered and have instructed the repairer to bill the insured for the VAT.
If it was a company vehicle then the company would have to insure it. If the OP is not declaring the car as a company car then he would be foolish to confuse issues by reclaiming the VAT (on repair costs and lease costs...).The insurance company appear to know it's a company vehicle and that the company is VAT registered and have instructed the repairer to bill the insured for the VAT.
The garage has issued invoices to the OP, as it should because the OP is the policyholder, but the OP isn't VAT registered and so can't reclaim the VAT.
The VAT registered company can reclaim VAT, but it isn't the policyholder and the VAT invoice hasn't been issued to them. A VAT rgistered company can't just reclaim VAT on any invoices issued to their shareholders/Directors/employees, such invoices have to be for expenses incurred wholly and exclusively for the purpose of trade, and I don't think that a claim on a privately insured vehicle passes that test.
I'm just looking at getting a commercial vehicle hence my interest in this thread.
Can I ask why the insurance was not done through the company as it could then have been offset against tax, correct?
Also, if the OP is the registered keeper, how can it be a 'company' vehicle? Would not have been registered to xxx.ltd as an asset (unless on lease contract I guess).
Can I ask why the insurance was not done through the company as it could then have been offset against tax, correct?
Also, if the OP is the registered keeper, how can it be a 'company' vehicle? Would not have been registered to xxx.ltd as an asset (unless on lease contract I guess).
dfen5 said:
I'm just looking at getting a commercial vehicle hence my interest in this thread.
Can I ask why the insurance was not done through the company as it could then have been offset against tax, correct?
Also, if the OP is the registered keeper, how can it be a 'company' vehicle? Would not have been registered to xxx.ltd as an asset (unless on lease contract I guess).
Personal tax on company cars is onerous, but companies can often lease cars cheaper and easier than individuals, so what sometimes happens is that a company leases a car, the recipient of such car then refunds all costs to the company and insures the car personally so that there's no cost to the company, and claims mileage. Whether this negates the need for the car to be declared as a company car is something that's been discussed on here very frequently.Can I ask why the insurance was not done through the company as it could then have been offset against tax, correct?
Also, if the OP is the registered keeper, how can it be a 'company' vehicle? Would not have been registered to xxx.ltd as an asset (unless on lease contract I guess).
RYH64E said:
Personal tax on company cars is onerous, but companies can often lease cars cheaper and easier than individuals, so what sometimes happens is that a company leases a car, the recipient of such car then refunds all costs to the company and insures the car personally so that there's no cost to the company, and claims mileage. Whether this negates the need for the car to be declared as a company car is something that's been discussed on here very frequently.
Does that negate BIK?Gassing Station | Business | Top of Page | What's New | My Stuff