Flat rate VAT scheme - business car lease possible?
Flat rate VAT scheme - business car lease possible?
Author
Discussion

hallion

Original Poster:

179 posts

198 months

Friday 13th May 2016
quotequote all
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 wink

ModernAndy

2,094 posts

166 months

Saturday 14th May 2016
quotequote all
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

125,802 posts

296 months

Saturday 14th May 2016
quotequote all
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

Original Poster:

179 posts

198 months

Saturday 14th May 2016
quotequote all
Thanks guys, that's good to know.

ModernAndy

2,094 posts

166 months

Sunday 15th May 2016
quotequote all
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

125,802 posts

296 months

Sunday 15th May 2016
quotequote all
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

13,858 posts

311 months

Tuesday 17th May 2016
quotequote all
Since your business use is so limited why not use your own car and claim the 45/25p per mile as allowed by HMRC?