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Vat in uk

Jameshurrell

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Nov 19, 2022
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Hi I believe that the grenanider does not have a one tonne pay load and there for does not allow you to reclaim the vat and bik which if this is right and at the moment nobody can tell me different then I think ineos has made a big cock up for business users. I was also asked for the vat number🤷‍♂️
 

dynosoar

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Sep 12, 2022
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Hi James,

Firstly I have no direct or qualified knowledge of the tax implications but in my opinion the carrying payload does not need to be 1 Tonne plus.
If you think about the basic fact that this is a ‘car derived van’ such as any unnumbered of small vans around that do not carry 1 tonne. Plus it is registered as a commercial N1.
I also understand that there are rules which define a commercial vehicle as having more load space than passenger space. This is why the five seat version has the rear seats further forward.
VW Transporter type vehicles with extra seats have a bit of a grey area here.
The two seat has no issues with that aspect.
So the Vat reclaim aspect should be straightforward I believe.
BIK is not something I have much experience of but ought to follow similar lines of other similar vehicles?

Regards,

A.
 

frankkk

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Dec 25, 2022
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Donegal
Hi J
Hi I believe that the grenanider does not have a one tonne pay load and there for does not allow you to reclaim the vat and bik which if this is right and at the moment nobody can tell me different then I think ineos has made a big cock up for business users. I was also asked for the vat number🤷‍♂️
Hi James,

VAT reclaim has nothing to do with the type of vehicle, but whether you have a VAT registered business AND you are using the vehicle for the business (at least in theory). When the business purchases the vehicle, it can "reclaim" the VAT, simply because VAT is not a corporate but an enduser tax - Well, "reclaiming VAT" is commonly used but not quite correct, you are offsetting your "input" VAT" against your "output" VAT, monthly, quarterly or yearly.

No business pays VAT, its merely collecting the VAT of the value it added to the goods for the taxman. For a vehicle that is a bit abstract now, because you are not buying it to sell it like your merchandise, however, the vehicle is required for the generation of revenue for the business (and therefor part of the VAT regime for the business).

Whilst we are at it from a tax and accountancy perspective, we might as well look at the end of the lifespan of the truck within the business, provided it has been taken on the books and not being leased. A lot of money can be lost here:

Every year (typically over a period of 5-8 years) you are depreciating the truck in the books, either linear (a set percentage of the purchase price) and preferable to the degressive method (a set percentage of the remaining value), unless you have to or want to depict a more realistic value. Say, you depreciate the truck by 20% over five years, it is worth 1 in your books after that time (0is nothing and the vehicle is still there). Since it commands 20k on the second hand market, you are netting 19.999 extraordinary revenue for the business. Some countries require you to tax that at full whack, others allow you, to re-invest that into your business in a tax neutral manner.

Either way, once the commodity (the truck) has been fully depreciated, it should be sold, because depreciation is cost, i.e. your earnings will increase w/o these cost and you pay more tax at year end. It has been common practise for businesses to sell their depreciated commodities at a much lower prices then their market worth - and finding an alternative solution for the difference.

There is another pitfall with the taxman: some countries and their tax regimes regard a truck as being used 100% for the business, always, whereas a car could be used privately - with that portion being taxed separately at a set rate (BIK). Should you need to be driving a car, not wanting to pay BIK, you could prove through a logbook, that the vehicle is being used exclusively for the business - which is tideous and too much hassle for many folk. From a business perspective, registering a 4x4 a truck instead of a car is usually a good idea.

To round things up, some countries have a VRT, a vehicle registration tax, which can be hefty. Trucks of certain categories might be exempt or charged at a reasonable flat rate of a few hundred bucks, as opposed to the top rate, which can be as much as 45% of the retail price.
 
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