VAT company car

mistychristy

Hi folks,

Im know othing about accountancy so please forgive my ignorance. My girlfriend has a beauty saloon and she now wants to buy a car through her business, she wants to know if its possible to claim back VAT on the car ?
Is their any webpages that can helop us understand the rules around what you can do when you have your own business ?

thanks in advance for any help.

attica2k

Yes your girlfriend can get Vat back on her car but I think the car has to fit certain criteria,

mik_da_man

Plus she'll have to pay BIK (benefit in kind) tax on the car.
I think you can claim VAT back on diesel but not petrol (not 100% sure on that)

Mik

boardswalker

Firstly, your girlfriend would be well advised to ask her accountant. Thats what he/she is being paid for.

There are several websites that provide the information you are looking for.
One of these is basis.ie

On that site, in the following section life event - taxation - value added tax,
I found the following -

"Non deductible VAT

A trader may not deduct VAT on any of the following, even when the goods and services in question are required or used for the purposes of a taxable business:

* expenses incurred on the provision of food or drink, or accommodation or other personal services, for the taxable person, his or her agents or employees, except to the extent, if any, that such provision constitutes a supply of services in respect of which he or she is accountable for VAT;
* expenditure incurred by a taxable person on food or drink, or accommodation or other entertainment services, where such expenditure forms all or part of the cost of providing an advertising service in respect of which tax is due and payable by the taxable person;
* entertainment expenses incurred by a taxable person, his or her agents or employees;
* the acquisition (including hiring) of passenger motor vehicles otherwise than as stock-in-trade (that is, for resale) or for use in a vehicle hire or driving school business.
* the purchase of petrol otherwise than as stock-in-trade;
* contract work involving the handing over of goods when such goods are themselves not deductible.

Also she will be taxed on the deemed benefit in kind. I would recommend a simple analysis to see if she would be better off buying her own car and claiming mileage expenses. Her accountant should help with that.

Hope this helps

Hope this helps

ircoha

mistychristy wrote:

Hi folks,

Im know othing about accountancy so please forgive my ignorance. My girlfriend has a beauty saloon and she now wants to buy a car through her business, she wants to know if its possible to claim back VAT on the car ?
Is their any webpages that can helop us understand the rules around what you can do when you have your own business ?

thanks in advance for any help.

u need to clarify if u are a sole trader or a ltd company.

The material from basis.ie posted here relates to a sole trader.

If a ltd company, for what u describe, in m y opinion the bik and the admin that goes with it now is such that the game is not worth the candle for a such a small set up
The bik on the car is 30% per annum and is payable under paye. PRSI is also payable.
Since 2004 the admin is a complete pain in the ....

You need to crunch the numbers re what mileage can be claimed as business miles to reduce the BIK
to from the house to the saloon is NOT allowed

Re the VAT, I dont believe the VAT is reclaimable unless u go for a commercial vehicle and even that is not allowed in one go but is drip-fed back.
see www.revenue.ie for the complte answer

boardswalker

ircoha said
"The material from basis.ie posted here relates to a sole trader."

This is incorrect. Basis.ie itself states that it "has been developed in order to provide business with a single access point to all Government information and services." It does not make a distinction between business as a sole trader or business as a limited company.

VAT applies to Registered Persons. A registered person can be a sole trader, partnership or company. From the Revenue Website - "VAT is a consumer tax. It is collected by VAT registered traders on their supplies of goods and services."

Rather than get into an over-and-back as to who is right or wrong I suggest that the OP takes advice from someone who has to stand behind the advice they give (ie someone who has professional indemnity) rather than make decisions based on anonymous postings by persons whose technical expertise cannot be verified.

ircoha

boardswalker wrote:

ircoha said
"The material from basis.ie posted here relates to a sole trader."

This is incorrect. Basis.ie itself states that it "has been developed in order to provide business with a single access point to all Government information and services." It does not make a distinction between business as a sole trader or business as a limited company.

VAT applies to Registered Persons. A registered person can be a sole trader, partnership or company. From the Revenue Website - "VAT is a consumer tax. It is collected by VAT registered traders on their supplies of goods and services."

Rather than get into an over-and-back as to who is right or wrong I suggest that the OP takes advice from someone who has to stand behind the advice they give (ie someone who has professional indemnity) rather than make decisions based on anonymous postings by persons whose technical expertise cannot be verified.

For the record

when

A trader

is used in basis.ie it refers to a sole trader.

The important words in what i wrote are in bold

The material from basis.ie posted here relates to a sole trader

If someone wants to interpret this as an afront to basis.ie, then go ahead.

The issue of being registered for VAT or not is not the critical question here, the key issue is can the OP reclaim vat on a company car in a ltd company.
The answer is no unless the car is leased : the vat on the lease payments are reclaimable.

In common with the other replys, I also gave some pointers on the very important issue of BIK..
My final point is that taking advice on the premise of being able to sue as they have PII is a bad way to approach any professional advisor.

boardswalker

ircoha wrote:

For the record

when is used in basis.ie it refers to a sole trader.

.....

My final point is that taking advice on the premise of being able to sue as they have PII is a bad way to approach any professional advisor.

First part - Please cite your source for this. I can find nothing in BASIS that supports your claim.

Second part. - Do you recommend instead making business decisions on the basis of advice from anonymous posters of unknown technical ability.

robbie checker

mistychristy wrote:

Hi folks,

Im know othing about accountancy so please forgive my ignorance. My girlfriend has a beauty saloon and she now wants to buy a car through her business, she wants to know if its possible to claim back VAT on the car ?
Is their any webpages that can helop us understand the rules around what you can do when you have your own business ?

thanks in advance for any help.

No vat allowed on purchases of cars unless for resale i.e. a garage selling cars or a driving school business. She may like to consider a commercial vehicle where Vat is reclaimable for say a jeep with no windows in the back and would be allowable to reclaim Vat on and she could use it for her beauty business.

ircoha

robbie checker wrote:

No vat allowed on purchases of cars unless for resale i.e. a garage selling cars or a driving school business. She may like to consider a commercial vehicle where Vat is reclaimable for say a jeep with no windows in the back and would be allowable to reclaim Vat on and she could use it for her beauty business.

well put RC.
one caveat: the vat reclaim on the CV is not entirely painless as it is widely abused

vir7ual

I'm self employed and registered as a sole trader

Yes you can claim on a company vehicle, yet this has to be commercial as pointed out ie, no back windows and no back seats, commercial jeeps, vans or car vans (cars with no back seats and no windows)

you can also claim on the diesel used in the vehicle

you can write off the vehicle through the business ie the car is costing you money every year in depreciation. This has to be wrote off over 8 years (stand to be corrected on this). this is wrote off against your tax bill at the end of the year.

Passenger cars, passenger jeeps etc are not VAT applicable

one thing where it gets hairy is when you get a passenger jeep with commerical back, crew cab jeeps?? dont know where this leads to.

kluivert

I havent been in this forum for a long time now.

No arguments please.

To the OP - As stated your girlfriend can only claim back vat on commerical vehicles. She may only claim back vat on diesel, not petrol.

ircoha

kluivert wrote:

I havent been in this forum for a long time now.

You were missed, not so much for ur mod role but the quality of your posts.:cool:

Good to have u back.

kluivert

ircoha wrote:

You were missed, not so much for ur mod role but the quality of your posts.:cool:

Good to have u back.

I have BB at home now, so i can keep an eye on things here more often.