8 December 2011    |    Uncategorized

A recent VAT question

Q – We have just bought a twin cab pick-up for the business. Will the VAT man allow the VAT incurred on the purchase to be reclaimed on the VAT return? 

A – Twin cab pick-ups have many of the features of cars e.g. rear passenger seats and rear passenger windows but also commonly have a “pick-up” area to carry loads. However HMRC accept that any vehicle constructed to carry a “payload” of a tonne (1000kgs) or more is in fact not a car but a commercial vehicle. This is important because VAT incurred on the purchase of a car cannot be reclaimed if it is “available” for private use. 

“Payload” is defined as the difference between a vehicle’s kerb weight and its maximum gross laden weight and so check the documentation carefully, as there are a few twin cabs which do not have a payload greater than a tonne. What is not commonly known however is that it is possible to “lower” a twin cab’s payload by adding certain accessories, thus converting the vehicle into a car? This is most likely to occur with twin cabs with a payload of 1000-1050kg. 

 HMRC however will ignore any accessory added other than a hard top. They will treat the addition of any hard top as having a generic weight of 45kg. So if the payload of the twin cab was 1010kg, the addition of a 45kg hard top would reduce the payload to 965kg. As such the twin cab would be a car with all the attendant rules restricting recovery of VAT on the purchase. 

There is potentially another twist in the tail in respect of trying to recover all of the VAT on the purchase. As these vehicles so closely resemble cars and are quite often used as such, HMRC will not simply accept 100% business use and will often to try and restrict recovery by the extent of private use. There is no set figure for this and every claim will be accepted or not by the fact given to them. 

As usual where there is potentially a lot of VAT at risk it pays to take advice.

Glasgow
31 Lynedoch St.
G3 6EF

Kilmarnock
71 King Street
KA1 1PT

Stornoway
49-50 Bayhead
HS1 2DZ

Website by Haiwyre