VAT in Unit 5 (FRA)

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pratikdparekh
pratikdparekh Registered Posts: 2 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
Can anyone give me some guidance with regards to the SSAP 5 accounting practice on purchase of delivery vans for a business. I know that company motor cars do not qualify for VAT refunds but is the same true for a delivery vehicle?
Thanks,

Pratik

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  • Jan
    Jan Registered Posts: 654 Epic contributor 🐘
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    To Quote from http://www.frc.org.uk/asb/technical/standards/pub0398.html

    Accounting for value added tax

    SSAP 5 Issued: April 1974


    SSAP 5 seeks to achieve uniformity of accounting treatment of value added tax (VAT) in financial statements.

    In the UK and the Republic of Ireland, VAT is a tax on the supply of goods and services that is eventually borne by the final consumer but collected at each stage of the production and distribution chain. As a general principle, therefore, the treatment of VAT in the accounts of a trader should reflect his role as a collector of the tax and VAT should not be included in income or in expenditure whether of a capital or revenue nature. There will, however, be circumstances in which a trader will bear the VAT, and in such cases where the VAT is irrecoverable, it should be included in the cost of the items reported in the financial statements.

    To answer your question if the trader is VAT registered he can cover the VAT on a delivery van, as you say he cannot recover VAT on a car, only in special circumstances. (I've been corrected on this elsewhere!)

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