Just taken on a new customer, who is a limited company. He was previously a sole trader of a completely different business which has ceased.
He leases a vehicle and has given me three invoices for the lease charges, which are being paid via his private account. He transfers random amounts to his private account titled 'car' - which Ive been putting to his DLA.
He is now insisting I use the invoices to claim the VAT back
1) Re VAT
-The invoices are addressed to him personally and mention the ceased business name, not the limited company
-The invoice states this is a non-qualifying vehicle under the Input VAT order 1992
-My understanding, although he disputes this (see below) is that he uses the car for personal use so even if it was allowable in the first place he could only claim back 50% input tax
SO - my understanding is I cannot claim the VAT back
2) Re Fuel
Eery time he fills the vehicle he uses the business Bank account for purchasing the fuel.
- He insists the vehicle personal use is absolutely minimal/almost non existant. He makes this claim on the basis that his Registered office is his place of work - the Reg Office just happens to be his flat. His former place of work (in the ceased business ) WAS the office beneath the flat so he couldve got away with that then (perhaps), but now he has a showroom several miles away which he travels to/from home to on a daily basis - Ive advised THIS showroom is his place of work and that he cant claim from home to the showroom. He does NOT leave the vehicle at the showroom.
So - even more so my understanding is that he cannot claim ANY of the VAT and indeed should be looking at a mileage claim/keeping a log.
Just want to see what people's views are and if I have missed anything?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I would definately get the lease invoice changed, particularly if it shows the name of his old sole trader business. The lease company may not allow a transfer
A lease must state that it is a"qualifying car" to be able to reclaim the VAT, so again you are correct.
You are also correct on the commute to work, the place of business, is where he performs his work, not his registered address, so there is private use, and therefore a benefit in kind, which needs to be reported as such through PAYE
The VAT on fuel can be adjusted using the fuel scale charge, so you will need to know the vehicle details
Hi Bill
Thank you for your answer - certainly glad Im on the right track. I dont think the lease company will allow a transfer but will certainly ask him. If they do and he then wants to put all future costs through the business what is the best way to treat the personal usage? Or would he just be better claiming the 45p to prevent the BIK situation?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
