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bigduckontax, Accountant
Category: Tax
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I have a UK registered company that owns classic cars. If we

Customer Question

I have a UK registered company that owns classic cars. If we have a car restored by a UK VAY registered company, can my company reclaim the VAT charged for the services performed?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am keith, one of the experts on Just ANswer, and pleased to be able to help you with your question. You most certainly can reclaim the input tax,but to do so your company must be registered for VAT also. The Turnover Threshold for VAT is 82K in any one year. You can voluntarily register if the turnover is below this level, but you will have to persuade HMRC that your trading is a reality. I do hope that I have shed some light on your company's position.
Customer: replied 2 years ago.
Thank you for your response. Since your reply I have also researched this issue.
Unfortunately, other sources have informed me that claiming the VAT charged can only apply if the vehicle concerned (a 1974 Jaguar Series 3 E-type Roadster) is used solely for business use. Obviously, this will not be the case. Additionally, when selling the car VAT will apply.
As I am personally registered as the 'Keeper' in the V5C DVLA document this confirms to the HMRC that it will be used personally.
Your answer will only be true or apply if the vehicle will be sold directly after the restoration is completed and my company is a bona fide car sales company.
So, as I want to personally use the vehicle, is there still a case that my company can claim back the VAT charged?
Please let me know your opinion now that you are aware of these circumstances.
Best regards
Neil Tye
Expert:  bigduckontax replied 2 years ago.
On the contrary as the car in question is owned by your company, Neil, it is used exclusively for business use; on behalf of the company. The fact that you personally are recorded as the keeper of the vehicle does not constitute ownership as DVLA are always keen to point out, indeed they print that warning on the document itself! If you can get your company registered for VAT then you are correct that on sale VAT will have to be added to the selling price; conversely, purchase and parts etc input VAT may be reclaimed. The use of the vehicle by you is a matter for the company and you, the company being an entirely separate legal persons. Your main problem may well be getting the company registered in the first place as HMRC may not deem it a bona fide car trading organisation. If you can clear this hurdle then you will be able to recover input tax.