i am new to this forum, which looks like one of the best, as I have looked at a few. At the moment I am studying AAT level 3 at college, am in a farming partnership with my husband and hope to set up my own bookkeeping business when qualified.
My query is, at present we contract lease a vehicle, claim back 50% of the VAT and put through 70% of the monthly payment as an expense (we part use the vehicle for private use). This lease is coming to an end and we have looked at PCP Personal Contract Purchase instead for the next vehicle.
How would I record this in our accounts, bearing in mind that technically we won't own this vehicle until we have paid the balloon payment at the end. Will it be a Capital allowance or do I just put the monthly payments through each month as an expense, there will be no VAT to claim back I think.
sorry it's a bit long winded, but any help would be appreciated.
Can't see your name anywhere, only need your first one, so can you add to your signature bar so it shows on your post, via edit profile.
Welcome.
whaddya mean...one of
Quick one, unless Johnny is not sleeping and can answer in full- it is January!!!!
Why are you claiming 50% vat on a veichle that is only 70% used for business?
You don't say what veihicle you are looking for, that is required.
Also why Pcp when it's a business? Only pondering aloud on this one as I haven't given the whole thing much more than a seconds thought, but in the event of an inspection ( HMRC) wouldn't that gave rise to them considering it a personal vehicle and disallowing any kind of expense.
edited for typo
-- Edited by Cheshire on Wednesday 25th of January 2017 09:14:44 AM
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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
From HMRC website "If you lease a car, you can usually claim 50% of the VAT. You may be able to reclaim all the VAT if the car is used only for business and is not available for private use".
We are looking at PCP because the cost will be less overall along with the monthly payment and we will have residual value at the end.
Hi,
I am confused. If you purchase a vehicle, paying by a monthly payment, which will be part business use and part private use, (forgetting the VAT element and not claiming it back) are you not allowed to claim a certain percentage of the monthly payment as an expense?
Why are you claiming 50% vat on a vehicle that is only 70% used for business?
Those were my thoughts too, but a cursory check on VAT 700/64 says that on a lease the 50% apportionment is to cover the private use element. Is that right? (Your knowledge of VAT is a lot deeper than mine)
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I have had this with a couple of clients in the past and yes 50% of the VAT is claimable, that was what was on the actual invoice from the leasing company when I did it. I did query it as in the past when they did it themselves they had put all of the VAT through, but after digging out the invoice it was only 50% allowable. I think it does depend on the invoice from the leasing company, and what sort of lease it is? It will say on the invoice hopefully. Or check with the accountant (I had to).
Not sure about the balloon payment bit though as theirs wasn't like that.
