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UK Gov't Urged To Boost VAT Recovery For Leased Vehicles

by Jason Gorringe, Tax-News.com, London

12 November 2015


The British Vehicle Rental and Leasing Association (BVLRA) is lobbying the Government to approve its proposal that would enable businesses to reclaim 60 percent of the VAT incurred on hire or lease payments for vehicles.

The BVRLA says that it is able to provide clear evidence to the Government that 60 percent of the total miles travelled annually in leased cars is for business use. The BVRLA provided HM Revenue and Customs with the evidence from more than 61,000 leased vehicles used for business and private use. Between them, these drivers had covered more than 795 million miles in the past calendar year. Uniquely, the BVRLA's broad sample of small and large businesses included firms that do and do not use a mileage capture system, and covered a wide range of industry sectors.

At present, businesses can reclaim 50 percent of the VAT incurred on the finance element of a company car lease or hire, and the European Commission has to approve this "derogation," the extension of which the UK Government must justify every three years. The 50 percent rate has been in place since 1995, and the current arrangement comes to an end on December 31, 2016.

BVRLA Chief Executive Gerry Keaney said: "The results of our 2015 survey provide robust evidence that the UK Government should now renew the VAT derogation to ensure UK firms leasing cars are able to lawfully and fairly reclaim 60 percent of the VAT paid on the finance element of hire or lease payments."

TAGS: VAT special schemes | tax | business | European Commission | value added tax (VAT) | VAT legislation | law | United Kingdom | legislation | Europe

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