HP Agreements

Gianni
Gianni Registered Posts: 99 Regular contributor ⭐
in General accounting discussion
Hi all

The company I work for has just purchased a car under a HP Agreement. Now I'm OK with all the entries including the ongoing finance/capital cost split (used the actuarial method). However I'm a little stuck on the VAT implications. I've searched the forum but couldn't find an answer.

Am I able to claim the full VAT? The car has been purchased for £35040.42 with the vat element being £5180.81. It's just I know with a finance lease you can generally claim 50% of the ongoing repayments and I'm sure the rules for cars are different!

Any help is appreciated.

Cheers

Comments

  • Jan
    Jan Registered Posts: 654 Epic contributor 🐘
    You cannot claim VAT back on a car, even if it is for full business use, only vans.
    Incidently, are you sure the figures you gave are correct? VAT on £35042.42 would be £5219.08.
  • Gianni
    Gianni Registered Posts: 99 Regular contributor ⭐
    Hi Jan,

    Thanks for your reply. The VAT figure is correct, it includes the car tax + registration fee.

    Cheers
  • Jan
    Jan Registered Posts: 654 Epic contributor 🐘
    So you have split car tax (RFL) from cost of car? :001_smile:
  • red_devil
    red_devil Registered Posts: 52 Regular contributor ⭐
    Jan wrote: »
    You cannot claim VAT back on a car, even if it is for full business use, only vans.
    Incidently, are you sure the figures you gave are correct? VAT on £35042.42 would be £5219.08.

    Don't forget Jan that you could claim back the input VAT if the car was a genuine pool car for 100% business use and which was only taken off the premises for business journies. Easy to overlook this I know!
  • Jan
    Jan Registered Posts: 654 Epic contributor 🐘
    :blushing: Actually I didn't know that :blushing:

    Are you saying that if say a car was kept on business premises and was only used by various members of staff on business, VAT could be reclaimed? When did that come in - must have missed it.
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
    red_devil wrote: »
    Don't forget Jan that you could claim back the input VAT if the car was a genuine pool car for 100% business use and which was only taken off the premises for business journies. Easy to overlook this I know!

    We had a case like this but still couldn't reclaim VAT as the vehicle was not a 'qualifying vehicle'. Essentially they weren't charged VAT so could not reclaim it

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