Claiming VAT on commercial vehicle, converting to campervan...

[jwa]

Hi all

I'm wondering if somebody has any knowledge of this (I'm suspecting the answer to be 'no' but worth finding out!)

I am a Graphic Designer working as a Sole Trader. I am registered for VAT (using the flat rate scheme). I want to buy a new vehicle - which happens to be a commercial vehicle (as I want to convert it into a camper van). The vehicle will only be used from a business point of view as my means of transport to meetings etc.

So, am I able to claim the VAT back on such a purpose? (not too interested in the capital allowance aspect for tax purposes - sounds too complicated … just the VAT!). When I buy the van it will be be a commercial vehicle, the conversion comes later, though looking at the vat guidance motor homes are also classed as 'not cars' for vat purposes either.

The crux of the question i guess is does the vehicle have to be soley for business use, and does converting it after the purchase affect anything

Thanks in advance!

 

[UK Contractor Accountant]

if the vehicle is used 100% for business when acquired then claim all the vat back. You will need to apportion the vat claim if there is private use of the vehcile as detailed below:

Method 1. Apportioning the VAT claimed, e.g. 10% private use, only claim back 90% of the VAT charged (100% - 10% = 90%) via your VAT return. Or;

Method 2. Accounting for some Output VAT each time the goods are put to private use. This second alternative may seem complex but if there is only a small amount of private use (of course the private use is always likely to be incidental) then the Output VAT accounted for is only going to small. So it’s unlikely to outweigh the cash-flow advantage of claiming all the VAT back when you bought it.

 

[UK Contractor Accountant]

I would not worry about the orginal vat claim when the conversion happens some years down the line.

 

[jwa]

Thanks very much for your reply. I've no idea what the split would be … it will be the households only vehicle … but during work hours (eg 9-5, 5 days a week) it is there available for me to get to clients … even though i might not need to go anywhere some days.

Where would that leave me?

 

[jwa]

ps the conversion would happen pretty quickly - it'll be kitted out as a camper but still be my 'daily' drive

 

[UK Contractor Accountant]

Vat on conversion would not be claimable under the VAT FRS.

 

[jwa]

sorry, not looking to recover the VAT cost of the actual conversion - only on the initial vehicle purchase… if possible…

 

[UK Contractor Accountant]

Technically speaking you would need to account for output tax on the market value of the the newly converted vehicle, however, if you pay for the conversion outside of the business whose to know?

 

[jwa]

Thanks .. so, on the initial question - about claiming VAT back on vehicle … you think this is partially possible ..? I need to apportion the VAT - not sure how though, see my message about about split …any thoughts?

 

[UK Contractor Accountant]

If HMRC look at it they would ask you to keep a mileage log for a sample period of say 3 weeks. You would record you business and private mileage from which you can work out the private use %.