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• # 83392
• Sun 24 Jun 2012 03:36 PM

Does anyone have any ideas on the following. I have a client who has been trading for 5 years and has recently registered for vat. I have gone back the 4 years to reclaim all the input vat paid on assets purchased during those years. However, there is a van on finance lease which started 3 years pre vat registration and has another 1 year to go. Payments are £200 + vat per month with a final payment of £4000 + vat to keep the van Do I claim all vat paid from day 1 on this lease as the van was capitalised in the balance sheet at the start of the agreement, or just the vat from the date of vat registration onwards. Any help would be gratefully received !!! Ian

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• # 83434
• Mon 25 Jun 2012 10:12 PM

Hi Ian,

If the van is on the balance sheet as a fixed asset, the repayments are effectively an HP agreement. I would check first whether the van has been capitalised correctly, i.e.  the initial agreement is that of HP or a lease (where the van can be returned at the end of the agreement). For example, is there a monthly vat invoice to support the payment? Or not?

If it's HP, I would reclaim the entire amount of the vat on the invoice for the cost of the van when purchased. If leased, I would reclaim the vat per the monthly payments.

Below is an excerpt from HMRC website

Reclaiming VAT on goods you bought before registration

You can reclaim VAT on goods you bought or imported no more than four years before you were registered for VAT if all the following are true:

• the goods were bought by you as the entity that is now registered for VAT (for example, the individual, business or organisation)
• the goods are for your VAT taxable business purposes, which means they must relate to VAT taxable goods or services that you supply
• the goods are still held by you or they have been used to make other goods you still hold

• Kind Regards 

  Karen Jewell

  Karen Jewell Ltd

  Bookkeeping~Accounts~Payroll

  www.karenjewellltd.biz

   

   

   

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