VAT Question - contract hire
Discussion
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.
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.
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.
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.
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!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.
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