Buying A Used Vehicle For Commercial Use

[Gman 29]

Evening all,

 

My father-in-law is a farmer and he has just put a deposit down on a used discovery from a Land Rover dealership.

 

The screen price is 22k, but whilst he's not up to speed on the backroom side of farming, he was under the impression that he would be able to recover a degree of the VAT back as it is to be used as a farm vehicle (their farm is VAT registered).

 

However, the dealer said that no VAT is charged on the vehicle but is this correct? I would have thought that they would have to pay VAT on the cars they sell, and thus it will be included in the screen price. Or is it a case that VAT is only charged on new vehicles.

 

Anyone have any thoughts on this?

 

Thanks

Graham

[Tom Fenton 1,542]

My ubderstanding is that generally VAT is only charged on true commercials e.g. Trucks and vans. A Land Rover is classed as a car.

[allanallen 528 2 Cars]

Maybe not if it's a commercial disco ie, no rear seats,tinted windows, s*it trim

[TooMany2cvs 65]

When any vehicle's new, VAT is payable on the full price.

 

If it's bought for business use by a VAT-reg business, then they reclaim the VAT, before charging VAT on the sale.

 

If it's then bought by another VAT-reg business, the same applies. Doesn't matter what it is - Smart car, Ferrari, 38-tonner.

 

As soon as it's bought by a non-VAT reg business, once, then VAT can't be reclaimed, and can't be charged on the sale. Since VAT is only charged on the margin on a used vehicle, not on the whole price, there's no VAT reclaim if it's then bought by another VAT-reg business.

 

You'll see phrases like "VAT-qualifying" on used vehicles sometimes. That's why.

http://www.hmrc.gov.uk/vat/sectors/motors/selling-cars.htm

http://www.pistonheads.com/classifieds/used-cars/mercedes-benz/amg/mercedes-cls63-amg-cls-63-vat-qualifying/825233

 

 

So, basically, unless that Landy's VAT-qualifying, he can't reclaim the VAT.

[ORB 227 1 Cars]

Captain 2CV is correct. Although a Dedender is a commercial, it could have been bought for private use. Thus it was probably £X plus VAT. Therefore VAT has been paid and does not need to be paid again.

[Gman 29]

Thanks for all the advice - that makes sense as it's a fancy disco probably used by some yummy mummy on the school run.

 

Thanks again

 

Graham