Claim back VAT on cars #3

In the past it has been extremely difficult for a business to claim back the VAT charged on a car purchase. All the VATman had to prove was that the car is available for private use. Whether it was actually used for private purposes wasn’t a factor. However, recent cases have made this easier.

The case of Philip Shaw illustrates this - a common argument for the VATman was that the vehicle being insured for ’social, domestic & pleasure’. Philip Shaw rebutted this by showing that both his car and his combine harvester were insured for social journeys. Clearly he didn’t use his combine for shopping trips - the only reason for the insurance was that it was cheaper than business only use, i.e. a commercial decision.

The tribunal held that the insurance policy for the car did not preclude the claiming of VAT on it.

See also article #1 and article #2.