KidsBeeHappy
2nd March 2009, 16:12
Can you reclaim the vat on finance lease monthly payments? (for a van) subject to normal private use rules & all of that.
Kevin Hall
4th March 2009, 10:57
It might depend on the precise terms of your contract and what you understand by the term "Finance Lease". VAT Notice 700, Section 8 discusses some of the different kinds of lease.
8.4 Hire-purchase, conditional sale and credit sale
Hire-purchase occurs under an agreement for the hire of goods for
periodic payments, where the hirer has the option to purchase.
Conditional sale means the sale of goods where the price is
payable by instalments. The goods remain the property of the seller
until the full price is paid or the customer meets another condition.
Credit sale means the sale of goods which immediately become the
property of the customer but where the price is payable by
instalments.
These are all supplies of goods, and VAT is due on their full value at
the time of supply (tax point); see Sections 14 and 15.
The key is the Tax Point. If you have effectively bought the item and are simply paying off in instalments, the Tax Point will be the date of delivery (with any prior deposit/invoice being a separate Tax Point for the value paid/invoiced). You might want to look at Section 14.2.1 of VAT Notice 700:
14.2.1 Basic tax points
If you supply goods, then the basic Tax Point usually the date when you send them to your customer or the customer takes them away. This includes supplies under hire purchase, credit sale or conditional sale agreements.
But whether you supply goods or services, the basic tax point is overridden if an actual tax point is created under 14.2.2 below [i.e. the Tax Point will shift if payment is made in advance of delivery, or if the invoice is issued before/within 14 days of delivery].
Hope it helps?