Hi, does anybody had the same problem as me...?I bought the van for my business in March on hire purchase agreement.The invoice I get from a dealer was bit different because it was made on the finance company and my details been on the "delivery to..".the business manager said is all correct,so I did my VAT return and now I have a problem,because the VAT officer want the invoice on my name.The financial company didn't want to give me this ..so I'm really angry-what to do?Is anybody who could help me?Thanks a lot..!
The invoice from the dealer should be made out to you, as you're named on the log book. The HP is simply a way of financing it. The HP company haven't bought it.
Must say I've not seen it done the way you've described unless it's a lease.
Hi,on the documents is hire agreement and I will be the owner when I'll pay all amounts.I looked on the hire agreements online and they said the supplier should make the invoice on my name.I don't know why they did it different...I'm not the one in UK buying the van this way...! Thanks
this would appear from your description to be a finance lease rather than an operating lease. In substance rather than form it is the equivalent of HP as substantially all of the risk and reward of ownership passed to you when you took put the lease.
The van will hence appear in your books as an asset even though you do not own the asset until the end of the term. If this had been an operating lease then no asset would have appeared and rentals would have gone straight to P&L touching the B/S only via a reduction in retained earnings.
Basics aside and back to the question at hand.
The van was sold to the finance company by the dealership in exchange for the full agreed value of the asset. It was not sold to you. This is one way of doing things and is correct.
The finance company should then take out an agreement with you that should be in your name by way of a finance lease for the asset.
They cannot have it both ways. They cannot hire out the asset on an operating lease then tell you that you can keep the van at the end of the term. That would be off balance sheet financing which is extremely naughty as the financial statements would not fairly present either the current financial position of your company or its non current assets.
I think that between all of the various parties they have tried to give you an arrangement that you have not asked them for. What you seem to want is to have purchased the van using a loan from a finance company but somewhere along the way they seem to have gone down the wrong leg of the leasing route.
How to get back from this.
The one's that you need to be talking with are the finance company rather than the dealership. All that the dealership did was sell a van which apparently now belongs to the finance company.
If the finance company purchased the vehicle in order to lease onto you by way of a finance lease then they need to issue you with the correct form of finance agreement in your name against which you can claim the VAT. It could however be that the finance company have already claimed back the VAT on their purchase and the VAT that you can claim will only be that attributable to each lease payment.
This is an area that seems straight forwards but isn't. There are too many variables in relation to who exactly owns the van, the type of lease, etc. It may be best to have your accountant have a quick glance at the lease documentation to determine the type of arrangement that you have entered into (I'll have money on it that it's not the type of arrangement that you think you have).
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Shaun,thanks for this all information.I am suprised,how it's possible for financial company to reclaim the VAT if they didn't pay it-I paid the VAT! If I have the order ,invoice on the financial company but with information that it was delivered to me and proof I paid the VAT why I can not reclaim it back.What other documents I could give to VAT officer ?...And I called few accountants they just said the dealer should make a credit note to cancel the invoice and make it on my name...and I don't know what should I do...Thanks for your help
the leasing company can only claim the VAT if they bought the van then rented / leased it onto you which I thought was the arrangement that you were indicating.
The real issue here seems to be whether the van should actually appear in the lessee's or the Lessors books as an asset (and of course the VAT on the purchase belongs there).
If you paid the VAT what did the leasing company pay for?
I think in order to determin what's gone wrong here we need to know the actual figures as to who paid what to whome and also the terms of the arrangement with the leasing company.
i.e.
Van cost £300 + vat Paid deposit £30 to dealership Leasing company paid £330 to the dealership Terms of the lease £12 (+ VAT?) per month for 36 months Interest rate defined in the agreement is x%
Knowing the interest rate here is quite important as we need to discount the future payments to determin the % of the asset that you are actually purchasing as one of the indicators as to what type of lease that it really is.
there's a mistake or misconception somewhere in here. It's just trying to figure out where the issue has occured and whose figures (recording of the Asset and VAT) are not what they need to be.
Talk soon,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
