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• # 78454
• Wed 18 Jan 2012 12:33 PM

Hi,

I am trying to ensure I post the acquisition and subsequent payments correctly for a car that has been acquired on contract hire. The vehicle will not belong to the company on cancellation of the contract and it is classed as a commercial vehicle.

Whilst I understand I do not capitilise the vehicle and all the payments are to be expensed to the P&L as and when paid, I would just like some clarification on the VAT element - do I claim this back? I know that when you purchase a car you are not permitted to claim the VAT back, but I am not convinced this is the same for a contract hire.

Any advice would be appreciated.

Many thanks,

Kerry

Edit: Advise/advice.....

Edited at 18 Jan 2012 12:35 PM GMT

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• # 78470
• Wed 18 Jan 2012 06:32 PM

Kerry,

If the hire is for a period exceeding 10 days at a time, then HMRC regard this as a lease agreement.
You can only reclaim 50% of the input VAT in that situation, and will have to expense the rest with the charges incurred.

• Kind regards,
  PeteL  

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• # 78474
• Wed 18 Jan 2012 08:36 PM

Hi PeteL,

The hire will be continuous for a couple of years. Many thanks for your advice, much appreciated.

Kind regards,

Kerry 

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