Claiming VAT on commercial vehicles

27 November 2021 Brian Gooch View all News

Most businesses understand that they can claim Input VAT on commercial vehicles, unlike cars on which the VAT is blocked. But what is classed as a commercial vehicle?

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

What are dual purpose vehicles?

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 windows, seats and seat belts may have been removed.

In 2015, HMRC produced a list of dual purpose vehicles such as combi vans which highlighted which vehicles are classed as commercial and which are not.  However, they have now not updated this list for over four years.

How to claim back VAT on commercial vehicles

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 expect to be able to thoroughly check when this is occurring!

If there is any private use then there should be an adjustment to the 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 often 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.

Read more: VAT on repairs, fuel and other motoring expenses

How can Shorts help with VAT queries?

VAT remains one of the least understood of all taxes, which is why we set up a specialist VAT advisory department, to help guide businesses through the complex maze of VAT legislation.  

Our team help with all areas of VAT from relatively basic issues such as initial registration, the completion and submission of VAT returns and advice on how to correct errors and mistakes, through to more complex issues such as assessments, control visits, cross border transactions and DIY house builds. 

If you would like further details regarding claiming VAT on commercial vehicles, why not get in touch, and discuss any queries you may have with a member of our team.

Learn more: VAT Advisory Services

Related articles

Tax-Saving Tips for Individuals and businesses

Written especially for entrepreneurs and owner-managed businesses, this guide is full of planning ideas and tax risks to avoid.

If you're looking for ways to reduce your liability, claim your copy and start planning how you could pay less tax.

Download Now

VAT and cars: Buying, Selling & Leasing

If you are VAT registered and use a car for business purposes, there are numerous VAT implications which you need to be aware of. HMRC routinely check the VAT treatment of cars when carrying out an inspection.

VAT & Cars Info
COMPLETE THE FORM AND A SPECIALIST WILL BE IN TOUCH

Free Consultation

Simply complete the form and one of our team of specialists will be in touch within one working day.

Begin your journey with us today

Drop us a line today to see how we can help your business thrive
GET IN TOUCH