The Revenue men were in at BVRLA last month (May 28) to debate how to avoid having to fall in line with European regulations on company car benefit taxes.

The European Union’s VAT rules normally prevent business from recovering any VAT for goods and services if there was any element of non-business use.

Lease car drivers typically get the benefit of personal use and there is the problem. If they do, there is no VAT recovery whatsoever.

In the UK for the last 15 years there has been an allowable recovery of 50%. The fixed rate has been an aid to business – to avoid the need for drivers and their employers to have to go through the grind of accounting for all the miles driven on business and private use.

This approach chimes perfectly with the stance of Prime Minister David Cameron who, in his first major speech to businessmen on Friday (May 28), said he was committed to cutting down on all the red tape that British businesses had to deal with.

Even before he spoke, Revenue and Customs supported this approach in relation to lease car usage. EU VAT rules disallow VAT rebates if there if any personal benefit.

For the UK to behave differently, it has to make a case every three years and that obligation has fallen due. BVRLA meanwhile, is out to prove that it is due for 70% recovery to more accurately reflect the average 30% private benefit.

Lex Autolease tax expert Andy Hogsden says they are supporting the BVRLA work and pressing for more VAT relief rather than accepting the European case for less. Talks with the UK Revenue and Customs will resume at a later date.

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Author: Rob Golding

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