vat - lease car

mandyc Registered Posts: 2 New contributor 🐸
Hi, Can anyone help please. The company I work for is setting up a subsidary company but as the new company doesn't have any credit rating we have had to lease a company car through the parent company.

If the cost was £100 per month + VAT, normally I would only claim 50% of VAT back, but if i've got to pass this charge on to the new company - what vat do I charge them?

Would it be that I claim back 50% of the VAT but charge them 17.5%, and they then claim back 50%.

I've not done subsidary accounts before so any advice would be welcomed.

Many thanks - Mandy


  • ereid
    ereid Registered Posts: 28 Regular contributor ⭐
    In previous experience of inter company accounts and charges, you charge them half the cost only then all the VAT on top. Hopefully this makes logical sense to you. Not sure how you charge half the VAT? it would not be a HMRC rate now would it?

    17.5% is not to be apportioned only the cost element, hope others agree.
  • Kay Thompson
    Kay Thompson Registered Posts: 22 New contributor 🐸
    VAT lease car Sage

    Any ideas the best way to enter the 50% VAT in Sage

  • NeilH
    NeilH Registered Posts: 553 Epic contributor 🐘

    In terms of recharges it is usual to recharge exactly as you are invoiced, since you are not necessarily making a supply: if you're charged £100 + £17.50 VAT simply recharge £100 + £17.50 VAT. The 50% deduction of the reclaimable VAT only applies if the vehicle is used for any personal use, since the invoiced company is not using the vehicle what so ever it is in effect the leaser. It would then be up to the subsidary to account for the charge and only reclaim 50% of the VAT. It's also worth noting that the "50% rule" only applies to the VAT on the lease charge, not any associated service or maintenance charges.

    Hope this helps

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