UK & Ireland Commercial and VAT reclaim

[DaveH1]

This may have been discussed before ...

I noted before the launch that the more commercial version was available in 2 and 5 seat versions and with the option of rear side windows. I read that the 5 seat version had less leg room in the rear seats. This was previously under the heading of Utility Wagon. It now appears that the base 5 seat model (£52k ) takes on this spec but is this base model valid as a commercial vehicle and would I be able to reclaim VAT? ( uk question i guess )

The idea of being able to claim back £10k of VAT is very attractive, I realise that a reclaim is based on the vehicle being used only for work.

Is there any other downside to going down the commercial route?, speed limits on motorways etc??

 

[Eg]

I would like to know the answers to this aswell.  I presume so as there would seem very little point in the 5 seat utility otherwise

 

[stickshifter]

This may have been discussed before ...

I noted before the launch that the more commercial version was available in 2 and 5 seat versions and with the option of rear side windows. I read that the 5 seat version had less leg room in the rear seats. This was previously under the heading of Utility Wagon. It now appears that the base 5 seat model (£52k ) takes on this spec but is this base model valid as a commercial vehicle and would I be able to reclaim VAT? ( uk question i guess )

The idea of being able to claim back £10k of VAT is very attractive, I realise that a reclaim is based on the vehicle being used only for work.

Is there any other downside to going down the commercial route?, speed limits on motorways etc??

In a different thread, I was informed that the commercial 2-seater will not have the battery in the same location as the 5-seat station wagon (inside the vehicle, under the second row of seats). The person who told me this did not know to where the battery was being relocated, and I haven't seen any info on this. Sorry to provide info without any documentation. I happen to like the location of the battery inside the vehicle. Locating it away from the engine bay keeps the battery from exposure to water, mud, heat, and also helps with the weight distribution (front-to-rear) of the vehicle. Before I learned this, I was leaning toward the commercial 2-seater. If I find some decent info I will post it here.

 

[JOB]

We have ordered our Grenadier ordered though the business, a 5 seat commercial, it will be used primarily as a work vehicle for carrying customers, staff, spare parts for machines and towing light plant. I have, possibly naively, been led by Ineos with their 'don't worry, its N1 Commercial' rhetoric until yesterday when I left it in the hands of the accountant. According to him, the only way VAT can be reclaimed on the 5 Seat version as a result of the sub 1000kg payload, is to register it as a pool vehicle exclusively for work duties. If it was registered as a van, a la Defender 90 Commercial, then it would be fully VAT reclaimable, if delivered before March 31st would qualify for 130% tax offset and carry a nominal BIK rate.

A major disappointment and a glaring oversight. I have since told Ineos that unless there is some sort of solution, we'll probably end up cancelling as the idea has gone from justifiable to extortionate. For a company as large and experienced as Ineos, I am astounded that they have slipped up on this, I wonder how many other '5 Seat Commercial', which I assume is the most popular variant, customers are re-thinking their decisions? To make matters worse, on the same phone call they told me that the car has actually been built. For this to all unravel so close to the finish line, I must admit, I am absolutely gutted.

 

[frankkk]

This may have been discussed before ...

I noted before the launch that the more commercial version was available in 2 and 5 seat versions and with the option of rear side windows. I read that the 5 seat version had less leg room in the rear seats. This was previously under the heading of Utility Wagon. It now appears that the base 5 seat model (£52k ) takes on this spec but is this base model valid as a commercial vehicle and would I be able to reclaim VAT? ( uk question i guess )

The idea of being able to claim back £10k of VAT is very attractive, I realise that a reclaim is based on the vehicle being used only for work.

Is there any other downside to going down the commercial route?, speed limits on motorways etc??

Once a vehicle is bought for business, VAT can be "reclaimed", regardless of the type of car/truck/4x4. All important is, its being used for business., i.e. registered in the name of the co. and taken on the books when purchased or treated as cost when leased. VAT is a a so called "enduser tax", i.e. no business pays VAT. A business collects VAT for the taxman from the enduser by offsetting its "input" VAT against its "output" VAT, which leads to the reclaim (in case you have more input then output VAT) in your relevant accounting period (month/quarter/year).

Prices for business users are usually quoted net, i.e. exclusive of VAT, I guess 57k in the UK is net or is it gross ?

 

[Tom D]

Its the same with all commercial vehicles, you can claim the vat back no problem. The issue is the BIK which is more tricky, because of the weight of the Grenadier it doesn’t qualify as a van, this means that to avoid BIK it has to be a pool car. We’re lucky that we provide a 24hour call out service so some staff take vehicles home without incurring BIK taxes. Without that its hard to justify the ‘pool car’ exemption.

 

[frankkk]

Its the same with all commercial vehicles, you can claim the vat back no problem. The issue is the BIK which is more tricky, because of the weight of the Grenadier it doesn’t qualify as a van, this means that to avoid BIK it has to be a pool car. We’re lucky that we provide a 24hour call out service so some staff take vehicles home without incurring BIK taxes. Without that its hard to justify the ‘pool car’ exemption.

BIK is an entirely different story and has nothing to do with VAT..whatsoever. Unless you are splitting the cost of the vehicle into personal and business, thus entangling the two in a way - which is utter nonsense but sometimes suggested by accountants or tax advisers.

 

[JOB]

Its the same with all commercial vehicles, you can claim the vat back no problem. The issue is the BIK which is more tricky, because of the weight of the Grenadier it doesn’t qualify as a van, this means that to avoid BIK it has to be a pool car. We’re lucky that we provide a 24hour call out service so some staff take vehicles home without incurring BIK taxes. Without that its hard to justify the ‘pool car’ exemption.

Tom you are right. Our intention was to buy the Grenadier in the same way one would buy a Discovery Commercial, and reclaim VAT, tax offset and pay the nominal BIK as per a 'van.' The fact that the Grenadier has 5 seats and can't carry 1000kg kills that one.

You CAN re-claim VAT on 'pool cars', provided they are used exclusively for business purposes, though on 6% of purchase cost can be offset against tax PA, rather than the usual 100% (130% up to 31/03/23) and these purely business only vehicles do not incur BIK, however you may run a risk of falling foul upon an HMRC inspection.

If this is the case with the 5 seat commercial Grenadier then you have all of the drawbacks of a commercial vehicle with none of the benefits.

 

[Tom D]

The laws on this are really at fault rather than ineos. My 110 defender was also a 5 seat and classed as commercial, i got vat back and its classed as a van for BIK because it weighed less than (i think) 2050kg… the grenadier does not fall in to this category due to it being heavier. I suspect some double cab pickups may fall foul of this too.

 

[JOB]

The problem is I do feel slightly mis-lead by Ineos - they clearly aimed for the 5 seater to be classified as Commercial but forgot to tell the engineers not to let it eat all the pies! a 5.5mm windscreen and the heaps of insulation boasted about in the press pack have come home to roost.

If in doubt, how about this from last Feb:

Why van versions of the Ineos Grenadier help with CO2 rules | Autocar

By offering a commercial variant from the off, Ineos has boxed clever with EU and UK emissions regs

www.autocar.co.uk

 

[frankkk]

Tom you are right. Our intention was to buy the Grenadier in the same way one would buy a Discovery Commercial, and reclaim VAT, tax offset and pay the nominal BIK as per a 'van.' The fact that the Grenadier has 5 seats and can't carry 1000kg kills that one.

You CAN re-claim VAT on 'pool cars', provided they are used exclusively for business purposes, though on 6% of purchase cost can be offset against tax PA, rather than the usual 100% (130% up to 31/03/23) and these purely business only vehicles do not incur BIK, however you may run a risk of falling foul upon an HMRC inspection.

If this is the case with the 5 seat commercial Grenadier then you have all of the drawbacks of a commercial vehicle with none of the benefits.

That's right, even so, VAT and BIK are two entirely different tax scenarios and often mixed up. A vehicle is either for business (where there is no BIK), for mixed used (where there should be BIK) or private use w/o any of these.

It is irrelevant how many seats and what designation the vehicle has for VAT or other business-taxes, it might matter for BIK in a mixed use, but not necessarily - see exemptions, thresholds and the option of keeping a logbook, to avoid failing a tax inspection.

 

[JOB]

or other business-tax

I agree with everything apart from this. If HMRC Classed it as a van, VAT could be claimed even in mixed use. The vehicle would also qualify for a tax rebate of 100%, 130% if invoiced before 31/3.

If HMRC class as a car, a company can only reclaim VAT if the vehicle is registered as a pool car, for business only. If use is mixed, user is subject to BIK and the company can't claim back VAT.

 

[bemax]

Tom you are right. Our intention was to buy the Grenadier in the same way one would buy a Discovery Commercial, and reclaim VAT, tax offset and pay the nominal BIK as per a 'van.' The fact that the Grenadier has 5 seats and can't carry 1000kg kills that one.

You CAN re-claim VAT on 'pool cars', provided they are used exclusively for business purposes, though on 6% of purchase cost can be offset against tax PA, rather than the usual 100% (130% up to 31/03/23) and these purely business only vehicles do not incur BIK, however you may run a risk of falling foul upon an HMRC inspection.

If this is the case with the 5 seat commercial Grenadier then you have all of the drawbacks of a commercial vehicle with none of the benefits.

It does not sound as the Brexit lowered the bureaucratic challenges by now... It sounds as "nice" as in Germany. Maybe worse.

 

[frankkk]

It does not sound as the Brexit lowered the bureaucratic challenges by now... It sounds as "nice" as in Germany. Maybe worse.

Not quite, but they are getting there..nothing compared with the French though..

@JOB that concept I don't understand. How could a one man show have a pool car, say he/she uses the Grenadier as a hearse. More realistic, a chauffeur buys a new Mercedes. No way the undertaker or the chauffeur pay BIK. How would that work ?

 

[JOB]

It does not sound as the Brexit lowered the bureaucratic challenges by now... It sounds as "nice" as in Germany. Maybe worse.

Please no mention of Brexit, we have Pistonheads for that!

 

[Krabby]

Please no mention of Brexit, we have Pistonheads for that!

We celebrate our Brexit every 4th of July .

 

[jamesfielding]

I agree with everything apart from this. If HMRC Classed it as a van, VAT could be claimed even in mixed use. The vehicle would also qualify for a tax rebate of 100%, 130% if invoiced before 31/3.

If HMRC class as a car, a company can only reclaim VAT if the vehicle is registered as a pool car, for business only. If use is mixed, user is subject to BIK and the company can't claim back VAT.

Hi Job,
I’m doing exactly what you had planned in terms of this will be a company car, with taking clients out shooting/site visits etc.
Hoping to get hold of mine before the 31/3 to qualify for that super deduction.
However, I won’t use it privately so avoiding the BIK drama.

 

[Stu_Barnes]

Thread moved to the UK section.

 

[JOB]

Hoping to get hold of mine before the 31/3 to qualify for that super deduction.

This is entirely my point, you can't apply that super deduction to the Grenadier as HMRC class it as a car, not a van, or a car derived van. You will only get 6% PA back. This is one reason for my dismay.

 

[Logsplitter]

The Professional Pick Up review U.K. mentions a bit about BIK. for those that haven’t read it.