So after a fair bit of discussion with my accountants things aren’t looking good.
Whilst ‘Pool Car’ status would be fine for HMRC re BIK tax it doesn’t wash with HM Customs and Excise. It is theoretically possible to claim the vat back on a pool car but the pool car rules are interpreted much more strictly by HMCE. According to my accountant HMCE would insist on the following: that it was written into the contract of the driver that it was not for personal use, that it was insured strictly for business use only. And that the car and the keys were kept at work. Even then they might still refuse a vat reclaim….
From my accountant re pool car status:
“The VAT definition is much stricter than the BIK definition. There are opportunities to deal with the private use through your director’s current account in order not to need to declare a benefit in kind, but from a VAT angle you would need to be able to show that there is a ‘physical and legal restriction’ on using the vehicle privately.
To satisfy the VAT criteria the insurance would have to be limited to business journeys, the vehicle and keys would need to be kept at the office and I would recommend also putting in place a board minute stipulating that private use is not allowed. There have been cases where, even if all of those items are in place, HMRC have still blocked the VAT reclaim. In your case you and your wife own the bulk of the share capital, as opposed to being answerable to unrelated shareholders with a larger stake in the company, so there would still be a risk that HMRC would block the claim.”
Not good news.
Considering my options now..
Whilst ‘Pool Car’ status would be fine for HMRC re BIK tax it doesn’t wash with HM Customs and Excise. It is theoretically possible to claim the vat back on a pool car but the pool car rules are interpreted much more strictly by HMCE. According to my accountant HMCE would insist on the following: that it was written into the contract of the driver that it was not for personal use, that it was insured strictly for business use only. And that the car and the keys were kept at work. Even then they might still refuse a vat reclaim….
From my accountant re pool car status:
“The VAT definition is much stricter than the BIK definition. There are opportunities to deal with the private use through your director’s current account in order not to need to declare a benefit in kind, but from a VAT angle you would need to be able to show that there is a ‘physical and legal restriction’ on using the vehicle privately.
To satisfy the VAT criteria the insurance would have to be limited to business journeys, the vehicle and keys would need to be kept at the office and I would recommend also putting in place a board minute stipulating that private use is not allowed. There have been cases where, even if all of those items are in place, HMRC have still blocked the VAT reclaim. In your case you and your wife own the bulk of the share capital, as opposed to being answerable to unrelated shareholders with a larger stake in the company, so there would still be a risk that HMRC would block the claim.”
Not good news.
Considering my options now..
