VAT on Commercial Vehicles

You would think that it was easy to identify a commercial vehicle, such as a HGV or a transit van and in most cases it is. However vehicle companies are now manufacturing vehicles that have a dual purpose.

These vehicles are car derived vans which are sold as lifestyle vehicles that can also be used for private use, they may look similar to cars but the manufacturer will have altered the inside so it can be sold as a commercial vehicle. For example the rear seats and seat belts may have been removed.

HMRC have produced a list of dual purpose vehicles such as combi vans and double cab pick-ups which highlights which vehicles are classed as commercial and which are not.

If you are claiming back the VAT on a commercial vehicle it is important to identify when it is being used for private use, as the VAT man will thoroughly check when this is occurring! If there is any private use then there may be a claw-back of VAT claimed. The VAT man will allow for occasional personal use of a commercial vehicle, but it is important to be able to prove it is only incidental use.

In essence, if you buy a commercial vehicle for your business you can normally reclaim the VAT in full. However, if it has a dual purpose and it is used significantly for personal use, there will be a restriction on the VAT that can be reclaimed.

If you require any further information on this please contact the office on 0116 242 3400.

Tom Luckett, Accounts & Tax

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