UK & Ireland VAT specifically on Station Wagon versions only & VAT in UK

[DCPU]

The HMRC doesn't like five seat LCV's because they see them as a tax dodge and l bet this is where the problem lies.

Because mostly they are...

 

[Toady]

Due diligence isn't that hard.

Walk into an agents and ask "By certified, what exactly do you mean?"

DD isn't hard but by that argument are you absolving responsibility of a manufacturer by inferring something, in their literature, that appears to be untrue?

As for dealers - three out of three phone calls to dealers, semi local to my location, and each one didn't balk when I said "I am looking at purchasing this vehicle because of the commercial status." Would you not have expected them to clarify the commercial status at that point of the conversation?

 

[DCPU]

DD isn't hard but by that argument are you absolving responsibility of a manufacturer by inferring something, in their literature, that appears to be untrue?

No, but as a business owner, VAT and any other tax matter, rests with you. The agent and manufacturer are not accountable for any meaningless statement they make.

As for dealers - three out of three phone calls to dealers, semi local to my location, and each one didn't balk when I said "I am looking at purchasing this vehicle because of the commercial status." Would you not have expected them to clarify the commercial status at that point of the conversation?

General rule ~ ask the same question three different ways, if the answers are all different, form a view.

 

[ADVAW8S]

@Toady what manufacture do you work for? I think we are all interested in hearing your insights and how your company would solve the hurdles that IG has faced as a start up.

 

[Tallzsmallz]

This is a problem for me as well. l've currently got a Defender Commercial which is okay as it's only a 2 seater.

However l can't claim the VAT back anyway because l am not VAT registered.

I can claim the tax back on the purchase price of £55,000.
BIK is £700 PA

The law on five seat commercials is a bit complicated, l don't think the Grenadier qualifies.
The govt changed the rules to try and close a loophole on people buying double cabs and getting away with company car tax etc.

I spent so much time looking into this & eventually cancelled my order, due to its payload not being able to carry 1 tonne it’s not classed the same as a double cab pickup ( there are certain types of these that don’t comply too…minefield!)so therefore you will pay the Bik as though it was classed as a 5 seater car.

 

[Toady]

@Toady what manufacture do you work for? I think we are all interested in hearing your insights and how your company would solve the hurdles that IG has faced as a start up.

Never said I was employed by a manufacturer and I've already stated what I believe should happen in the post about unhappy owners.

Short version: better comms at head office level to customers and ADs, coupled with dealers setting realistic expectation levels of potential customers to minimise expectations vs reality and thereby reducing the chance of, and level of, post purchase dissonance.

 

[ADVAW8S]

@Toady i apologize for making the comment about the manufacturer. I relooked at your quote "I worked closely with an established small volume UK car manufacturer" and I asked the wrong question. I should have asked what car manufacturer do you work closely with?

I agree better communication would help but I feel they have been pretty open compared to other car companies. Look at Toyota with diselgate, JLR send cars with downgraded parts. Not communicating with the owner but charging the higher price, or anything Tesla. All these manufacturer lack communication during these times.

 

[Toady]

@Toady i apologize for making the comment about the manufacturer. I relooked at your quote "I worked closely with an established small volume UK car manufacturer" and I asked the wrong question. I should have asked what car manufacturer do you work closely with?

I agree better communication would help but I feel they have been pretty open compared to other car companies. Look at Toyota with diselgate, JLR send cars with downgraded parts. Not communicating with the owner but charging the higher price, or anything Tesla. All these manufacturer lack communication during these times.

Professional courtesy means I won't name names and it is somewhat irrelevant - these are just my opinions, based on personal experience both in the commercial world and as a customer; however, most small scale manufacturers of lifestyle products tend to suffer from similar issues, at least in my experience. I would argue that very few meet or exceed the expectations of the majority of customers, specifically in a post-pandemic world, when it comes to service. Therefore, I am in agreement with your comment with respect to other examples and manufactures; furthermore, I would suggest that the list goes on. Without wishing to sidetrack or digress, the pandemic was the best thing that could have happened to the majority of the automakers - pre pandemic sales were slow, stock was high and it was the typical over supply and under demand. Scroll forward to people sitting idly and not spending income in other areas, thus having (the appearance of) more disposable income, parts shortages, manufacturing freezes and the tables turned (of course there are niche products where demand never slowed but I am talking mainstream products). I'd suggest that tide is now shifting again, as is most often the case but the return to a more balanced market will take time. There are many people who have gotten used to high residual values on used cars and the decline in that will come as a surprise to many, when it should not. Pre-pandemic depreciation of 20-30% in the first 12-months and 50% (or more) in three years was common but many consumers have short memories, especially when justifying a purchase (man logic, although ladies seem no less immune to it! )

Going back to my original point, there is always going to be (imho) an obstacle to setting realistic expectations at customer level when salespeople are involved. I've watched, first hand, approved dealer (AD) sales teams set totally unrealistic quality expectations because they fear honesty will cost them a sale. Where sales targets and financial incentives are involved, can you blame them? There are logical ways around this but it involves a rethink and new approach. To my mind, Ineos are actually well situated to take this approach but as they are using existing sales channels, this is unlikely to be achievable. Had they more time, and the will, the AD network could have been a fascinating example of a new way of approaching customer and sales.

However, as it stands, given the posts on this forum, and others, as well as personal blogs, vlogs, social media, etc, I would suggest a concerted effort to increase comms to new and existing owners, as well as dealers setting realistic expectations with owners, would be a good start. As I said in my previous post, I have always worked on the ethos that people remember solutions (or lack of them) and not the problem themselves. Take a proactive approach to customer satisfaction, be an example of issues resolution within the industry and a lot of the negatives will rapidly dissipate.

 

[lightning]

The Grenadier is classed as a Commercial Vehicle by the DVLA so you pay Commercial Vehicle road tax rates.

However it's not been approved as Commercial by HMRC. Run one as a company vehicle and you'll get stung for BIK at car rates. lf you're a Limited Company you can charge the business mileage at 45p per mile.

The new Defender Hardtop has been approved by HMRC as Commercial, so you can put it through your LTD Company and BIK is fixed at Commercial rates which is around £700 per year.

lf lneos get the Grenadier classed as Commercial by HMRC l'll buy one. As it is, the tax advantages (of the Defender Commercial) make it the better option.

 

[lightning]

The Taxman and the Ineos Grenadier

I have seen a lot of very poor commentary about the UK tax situaton of the M1, (Belstaff Editions), and N1, 2 seat Utility and 5 seat commercial Station Wagon, with people expecting to be able to register and recover VAT and avoid the higher Benefit In Kind, (BIK), of cars compared to vans, like ...

forums.lr4x4.com

 

[Toady]

The Taxman and the Ineos Grenadier

I have seen a lot of very poor commentary about the UK tax situaton of the M1, (Belstaff Editions), and N1, 2 seat Utility and 5 seat commercial Station Wagon, with people expecting to be able to register and recover VAT and avoid the higher Benefit In Kind, (BIK), of cars compared to vans, like ...

forums.lr4x4.com

I'd say that is pretty definitive.

N1 for DVLA but NOT judged a Commercial vehicle by HMRC.

Will be interesting to see if they have better luck with the DCPU and HMRC - if other 4/5 seater pick ups can qualify, you would have thought Ineos could make the case for the Grenadier DCPU.

@lightning you raised the thorny topic of the new Defender HT and I think the intelligent thing LR UK did was not put side windows in the 90 or the 110 or try to have a second row of seats (specifically the 110). The fact the Utility SW is the same as the standard vehicle, bar the luggage space windows being blanked, makes the case for it being a true Commercial vehicle challenging.

I would not have been surprised if Ineos had previously lobbied the UK gov in other matters, therefore turning those channels towards getting Commercial status for the 2-seat Grenadier at a bare minimum.

 

[lightning]

l believe that Land Rover worked to get the Defender classed as Commercial with HMRC
Which is why it's been so popular. By putting mine through my LTD company l've saved £14,000 in tax
Sadly l am not VAT registered so can't reclaim VAT. But even so it's made the Defender effectively under £40,000

l tried to make the Grenadier work but the figures didn't add up, it would have cost me £60,000.

Looking at the lneos reply above (to that question) it sounds like they've pretty said it's not going to happen. lt's a "global vehicle" they've "focused on the core competency of the vehicle and not it's U.K. tax status"

There is apparently a glimmer of distant hope for the two seat version. lt would certainly make it appeal to a wider set of buyers.

 

[DaveB]

l believe that Land Rover worked to get the Defender classed as Commercial with HMRC
Which is why it's been so popular. By putting mine through my LTD company l've saved £14,000 in tax
Sadly l can't reclaim VAT. But even so it's made the Defender effectively under £40,000

l tried to make the Grenadier work but the figures didn't add up, it would have cost me £60,000.

Looking at the lneos reply above (to that question) it sounds like they've pretty said it's not going to happen. lt's a "global vehicle" they've "focused on the core competency of the vehicle and not it's U.K. tax status"

There is apparently a glimmer of distant hope for the two seat version. lt would certainly make it appeal to a wider set of buyers.

You have a very restrictive tax system in the UK and considering also that they are limited to selling only 6,000 vehicles a year then it probably isn't worth them worrying about.
Very few restrictions in Australia to quantity they can sell and what can be claimed on tax. (opening can of worms)

Deductions for motor vehicle expenses

As a business owner, you can claim a tax deduction for expenses for motor vehicles – cars and certain other vehicles – used in running your business.

www.ato.gov.au

 

[lightning]

Yes it's a bit of a nightmare. Bow
can the vehicle be "Commercial" with the DVLA but not with the HMRC.

l think the problem has arisen because of many people buying double cabs as cars and registering them as "Commercial Vehicles" to get around tax/BIK on company cars. So the U.K. government has closed this loophole. Sadly this has affected vehicles like the Grenadier.

 

[landroverlen]

hi everyone, i have decided to not purchase a grenedier on my accountants advise, he has cancelled his, the situation as i have understood it is that if a commercial vehicle carries 1 ton then it automatically gets vat reclaim status. as everyone knows the grenedier does not, threfore to become a vat claimable commercial as a defender is the vehicle must be on hmrc,s approved list, this is something ineos have not done for some unknown reason (god knows they have had long enough) i would threfore advise takijng extreme caution if thinking of claiming vat.

 

[Eric]

hi everyone, i have decided to not purchase a grenedier on my accountants advise, he has cancelled his, the situation as i have understood it is that if a commercial vehicle carries 1 ton then it automatically gets vat reclaim status. as everyone knows the grenedier does not, threfore to become a vat claimable commercial as a defender is the vehicle must be on hmrc,s approved list, this is something ineos have not done for some unknown reason (god knows they have had long enough) i would threfore advise takijng extreme caution if thinking of claiming vat.

The reason is it is a worldwide vehicle with restricted numbers in the UK and even fewer numbers who claim their vat back, so in the words of Mr Spook; the needs of the many out way the needs of the few.
It would also have taken it above the UK 3500kg driving licence restrictions. So what buyers they would make by more vat claimers may be offset by licence restrictions sales. And since they can sell their quota....

 

[landroverlen]

The reason is it is a worldwide vehicle with restricted numbers in the UK and even fewer numbers who claim their vat back, so in the words of Mr Spook; the needs of the many out way the needs of the few.
It would also have taken it above the UK 3500kg driving licence restrictions. So what buyers they would make by more vat claimers may be offset by licence restrictions sales. And since they can sell their quota....

hi eric
i can see the logic but surely a large amount of their target customers are going to be small business owners, farmers, utility companies, all of which would be hoping to claim the vat back, anyway ordered a new defender now to replace my ageing disco 3, much cheaper as it happens, maybe a grenedier one day

 

[Eric]

hi eric
i can see the logic but surely a large amount of their target customers are going to be small business owners, farmers, utility companies, all of which would be hoping to claim the vat back, anyway ordered a new defender now to replace my ageing disco 3, much cheaper as it happens, maybe a grenedier one day

I would disagree that farmers, utility companies would have a vehicle that had a licence restriction because it was over 3500kg. This would restrict a company's driver resource, they are more focused on Corporation tax deductibles and I think they would be going down the lease route for most company vehicles. Farmers labours also tend to be younger people.
But in view of the UK quota of 6000 (from memory, and of which there are numerous threads on this quota) of which 1700 are M1 class for which you can't claim vat anyway. That leaves 4300 N1 class. So max target customers is only 4300 and if you assume some won't be vat registered but private/pleasure users your target market is peanuts compared to Aus, US and ROW sales.

 

[Jeremy996]

There is are threads in the UK section on this already, - https://www.theineosforum.com/threads/the-grenadier-hmrc-and-dvla.12411181/ and https://www.theineosforum.com/threads/vat-specifically-on-station-wagon-versions-only.12412276/

Nothing has changed.