The EU Council of Ministers has officially extended the UK’s 50% VAT reclaim on leased and rented cars until December 2019.
Under a derogation granted to the UK by the Council, UK businesses which lease or hire cars used in their business can treat only 50% of the VAT incurred as their input VAT. The derogation was due to expire on 31 December 2016, but has now been extended for a further three years.
The BVRLA submitted a robust set of data prior to the renewal of the derogation which showed that business mileage was higher than private mileage for most leased or rented cars. However, despite this evidence HMRC applied for the derogation at 50%. The BVRLA will be meeting with HMRC shortly to discuss what happens once the UK leaves the EU and to understand what further lobbying opportunities exist. For further information, contact Patrick Cusworth patrick@bvrla.co.uk at the BVRLA.
This article has been reproduced with the permission of the BVRLA (http://www.bvrla.co.uk)