Just seeing if people are leasing these vehicles as company cars?

When the depreciation is so low and no discounts, I'm thinking it's not worth leasing but interested to hear thoughts?!

I’m buying mine via my business and as you say, with little depreciation it will be mainly the interest that you will lose but I’m sure you can offset that in the accounts.
Should be reasonably cost effective for a year or so. Current fleet:
2020 McLaren 600LT Spider
2020 Mercedes C300 Cabriolet
2023 PHEV 440 SE
1992 Lotus Esprit turbo
2019 Alpine A110

Yes, cost effective, versus £70k+ for a lease (albeit certain tax advantages) over 4 years.

I'm leasing mine through my company (a 440e HSE) which, given the ultra-low BIK, salary sacrifice at 40%, and 50% off the VAT for the company, is very attractive indeed ...

I thought the 50% vat was only applicable if it was a pool car and not available for personal use?

Sorry just re read, you are leasing so yes 50% vat reclaimable for personal use.

100% if for solely business use.

I don't know if there's an accountant amongst us, or perhaps someone who is 100% certain of their knowledge on this subject, or potentially knows of a legal loophole / solution.

Like others have said here, I'm also buying a P440e Autobiography through my company. From what I understand, as a new car, that makes the vehicle VAT Qualifying. According to Google, this means:

"A VAT Qualifying Car is a car that has previously been owned by a business or is a brand-new car from a main franchiser. A VAT Registered individual or company buying the car solely for business use or for export outside of the EU can reclaim the 20% VAT from the purchase price"

However, when I've spoken to our accountant, he is adamant that we cannot recover the VAT unless it is a Pool Car. He has replied with the following, stating that the car would need to meet the following criteria:

"HMRC take the view that such vehicles have deemed private use and look through (ignore) actual private use when it comes to VAT recovery. In order for HMRC to accept these as pool cars, you would have to ensure that:

1) They were not kept at home overnight (not even at a home office)
2) They were insured for all or substantially all employees to drive and have access to
3) It must not be ordinarily used by one employee at the exclusion of others
4) You would ideally keep a usage log to provide to HMRC, should you be required to, showing which employee used the car and on what dates

It is very difficult to meet the pool car rules for VAT purposes".

Our accountant is very good, usually always right, but 100% straight, which means he does everything to the letter and is not very creative.

What's really frustrating though, is that we have 4 cars in our household between two of us, we go everywhere with our two dogs, which we have an old L322 for, so this car genuinely will be 100% business use.

What also seems wrong, is that not only can I not recover the 20% VAT when buying, I will have to repay 20% VAT to the VAT man on the sold price at time of sale!!! - God, can we get shafted anymore!

Is our accountant correct in his statement and advice?

I would love to know if there's a fair way to recover this element of VAT, or are others of you under the same impression.

Anyone?

I agree that you can't recover the VAT on buying.

I don't know if you need to charge VAT on the disposal? That would kill buying it.

As it’s not a commercial vehicle then the VAT situation is always going to be questionable but just because the business is VAT registered doesn’t allow the directors to get away with using a car for personal use without there being some penalty and certainly upon sale VAT needs to be accounted for!

We ordinary folk that are not VAT registered have to pay full price plus VAT so welcome to the real world lol  "UNDERSTEER" ----is when you hit the fence with the front of the car.
"OVERSTEER" ------is when you hit the fence with the rear of the car.
"HORSEPOWER" ----is how fast you hit the fence.
"TORQUE" -----------is how far you take the fence with you.

It's simply that you can't recover the VAT on purchase, but then whether you have to charge VAT on disposal.

E.g. Buy for £110k incl.VAT, sell for £90k, but if you then have to charge VAT on sale = £108k! Or more likely sell for £90k, and lose £15k to VAT.

This is nothing about avoiding the real world or getting away with stuff. It's just not paying VAT twice is aja's question.

You're a case of better to say nothing, than demonstrate you're a fool.

Clipper, not sure who that’s directed at but sorry you’re wrong.

If the company/individual is VAT registered then VAT may be reclaimed but some vehicles are classed as “commercial” whilst others are not. The VAT rules are open to interpretation for non commercial vehicles and the final decision is with the local inspector but your accountant will offer advice/guidance etc and will argue your case if the inspector goes against his advice.

Obviously it is up to the director/individual to accept or not the accountants advise.

If VAT is claimed upon purchase then VAT must be charged upon sale.

Happy to continue this via PM if your suggestion of being a fool was directed towards me but I suggest you show a little more respect to members  "UNDERSTEER" ----is when you hit the fence with the front of the car.
"OVERSTEER" ------is when you hit the fence with the rear of the car.
"HORSEPOWER" ----is how fast you hit the fence.
"TORQUE" -----------is how far you take the fence with you.

Last edited by Japseroony on 26th Feb 2023 12:49pm. Edited 1 time in total

The issue is that VAT won't be reclaimed on purchase.

Does it have to be charged on sale is the only question?

7.2 Your business sells a car on which VAT was blocked
If you sell a car where you were charged VAT but could not recover any of that VAT, then you do not have to charge VAT on the sale and cannot issue a tax invoice. This is because the sale of the car will be exempt. Any input tax charged, which directly relates to the sale (for example VAT on auction fees) is exempt input tax.

Japseroony wrote:

As it’s not a commercial vehicle then the VAT situation is always going to be questionable but just because the business is VAT registered doesn’t allow the directors to get away with using a car for personal use without there being some penalty and certainly upon sale VAT needs to be accounted for!

We ordinary folk that are not VAT registered have to pay full price plus VAT so welcome to the real world lol

[quote=“aja500”]Jasperoony, to be fair, just because it doesn't say Transit on the back and has windows in the rear, why should I have to pay tax for a vehicle which is essentially only used for business purposes? It wouldn't be expected if I was a builder in a van.

As for your comment about you being "ordinary folk" and having to pay VAT on a car and "welcome to the real world". Well my real world see's the company which I built pay over £1m each year in VAT alone, just shy of £400k in Corporation Tax annually, and my own personal income is taxed at 50%, so please don't talk to me about the real world, as if I don't pay my way.

Your measly contribution of VAT on a Range Rover is chicken feed![/quote]

My heart bleeds for you but you clearly don’t know much about tax - there is no 50% tax bracket as the highest is 45% and clearly if you pay £1m in VAT then you will be claiming that or more!

My comment was “tongue in cheek” which is why I blew a whistle and offered an lol but you clearly got your panties on fire.

As for profit/paying VAT etc you know nothing about my situation or tax position so keep your earnings to yourself

If however the only way you can afford a FFRR is through your company then maybe you need some advice.

So lease/buy/hire what ever you like and pay the VAT like everyone else or pay company car tax, sure on your salary that is taxed at 50% you can afford it  "UNDERSTEER" ----is when you hit the fence with the front of the car.
"OVERSTEER" ------is when you hit the fence with the rear of the car.
"HORSEPOWER" ----is how fast you hit the fence.
"TORQUE" -----------is how far you take the fence with you.

Last edited by Japseroony on 26th Feb 2023 6:17pm. Edited 1 time in total