Quick and probably daft VAT question....

[Former Member 1]

Years since I've run a vehicle through a Limited Company so I'm a bit unfamiliar with this....

IF I, or rather my company buys an older car, retail or private, with NO V.A.T. on it.... I run it for a while then dispose of it.. what's the VAT position on disposal?

DO I need to charge VAT on the sale?

 

[Scottish Business Owner]

Hi Matt,

I assume it's a car you are buying so it's not therefore classed as a commercial vehicle. If it's not a commercial vehicle then you do not charge vat on the sale. If it's no vat on the way in then i would think the same applies on disposal.

 

[Former Member 1]

Thanks ....

I plan on getting shot of the Freelander which I've been running myself and simply claiming back mileage on.

I plan replacing it with a Discovery or a Range Rover. These need to be older ones though as the newer models are unreliable. So I can't just go an lease one or something.... Although I'd hope to get many years out of them I don't want to get into the situation that occurs with old vans where you have to take a real drop on selling as no-one wants to pay the VAT on top and you wind up having to absorb it.

 

[Scottish Business Owner]

Fair comment Matt although I would be weighing up the pro's and cons of having it in the business versus owning it yourself and claiming mileage. The main sticking point i've came accross is HMRC's reluctance to accept that a vehicle is being solely used for business purposes. It would be worth doing a few calculation to see what is the most tax efficient way of actually doing this. In most circumstances ( and it's only in most) it normally is better to have the car sitting outwith the company. This is of course purely my own opinion and will need to be assessed based on your own circumstances.

 

[Former Member 1]

Fair comment Matt although I would be weighing up the pro's and cons of having it in the business versus owning it yourself and claiming mileage. The main sticking point i've came accross is HMRC's reluctance to accept that a vehicle is being solely used for business purposes. It would be worth doing a few calculation to see what is the most tax efficient way of actually doing this. In most circumstances ( and it's only in most) it normally is better to have the car sitting outwith the company. This is of course purely my own opinion and will need to be assessed based on your own circumstances.

Well, this is what I've been doing up 'till now...... Thing is between the wear and tear on the thing, fuel, initial purchase etc it's really coming out of my own pocket rather than the business...

I have another car, in fact two other cars one of which is insured for domestic use only... And the Land Rover would get modifications made to it and probably liveried such that it would be less than ideal for domestic use....