# Claiming back VAT on 4x4



## Ron Burgundy (14 Jul 2007)

hi,

i work as a sole trader but am thinking of starting a seperate limiting business. I currently have a commerical 4x4 but if i started the limited business could i claim my vat back in one lump or should i do it on a bi monthly basis ?????


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## woods (14 Jul 2007)

If you paid for it in one lump sum then you calim the VAT back that way but if you are paying for it HP monthly then you have no choice but to claim it bi monthly.
You can only reclaim VAT in the period in which you pay it.


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## woods (14 Jul 2007)

If you already own the vehicle. How are you going to transfer ownership to the company.


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## woods (14 Jul 2007)

If you already own the vehicle. How are you going to transfer ownership to the company.


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## woods (14 Jul 2007)

If you already own the vehicle. How are you going to transfer ownership to the company.


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## woods (14 Jul 2007)

I do so hate to repeat myself. Can we delete 2 of these please.


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## Ron Burgundy (14 Jul 2007)

i bought it last jan, but i might treat myself to another new one in jan 08, only part of it will be financed as i traded in a car that i owned fully.

4x4 cost maybe 40k and i put in 10k of my own.

might i just be better advised to bring in one from the uk if i can get my own sold ????


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## woods (14 Jul 2007)

You can only claim VAT back on something if you have a VAT invoice for it. 
You could sell your own and then lend the money from the sale to the company. The company can then put that money towards the purchase of the new one and claim the VAT back on it.
You can then repay the loan to yourself at a later date when the company is in funds and not pay tax on it.


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## extopia (18 Jul 2007)

Also, you don't need to be a limited company to be VAT registered.


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## Ron Burgundy (18 Jul 2007)

oh i know that but i want to keep this business seperate. it would be an agency and all work would be on a sub contract basis. therefore i would be sub contracted to the business


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## extopia (19 Jul 2007)

That clears that up so. Are you sure you know what you're 
doing?


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## Niall M (19 Jul 2007)

woods said:


> If you paid for it in one lump sum then you calim the VAT back that way but if you are paying for it HP monthly then you have no choice but to claim it bi monthly.
> You can only reclaim VAT in the period in which you pay it.


 
wrong, with hire purchase you can claim all the vat back in one lump sum, if a lease you claim bi monthly.

also, reclaim vat depends on invoice date, and not on payment date.


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## woods (20 Jul 2007)

Niall M said:


> wrong, with hire purchase you can claim all the vat back in one lump sum, if a lease you claim bi monthly.
> 
> also, reclaim vat depends on invoice date, and not on payment date.


Sorry.
I thought that it was the same thing and that Lease was the "more acceptable" term for HP.
I have not heard anyone use the term HP for a long time and did not know that such a process still existed.
Surely then it is better to HP than to lease but are the charges higher.


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## ButtermilkJa (20 Jul 2007)

It's one in the same I think. There are some differences with ownership on paper etc., but with HP, if you want to claim the VAT back in one lump sum, you have to pay it yourself in one lump sum at the beginning. Your financial institution will only pay up for the ex-vat price. So the only advantage is that it reduces your monthly payments (i.e. they will be ex-vat payments per month).

If you have the cash flow to pay the VAT and you don't fancy having to wait 2/3 months to claim it back then go for HP. If you don't want to fork out a lump sum for the VAT up front, then go for lease.


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## Niall M (23 Jul 2007)

ButtermilkJa said:


> It's one in the same I think. There are some differences with ownership on paper etc., *but with HP, if you want to claim the VAT back in one lump sum, you have to pay it yourself in one lump sum at the beginning*. Your financial institution will only pay up for the ex-vat price. So the only advantage is that it reduces your monthly payments (i.e. they will be ex-vat payments per month).
> 
> If you have the cash flow to pay the VAT and you don't fancy having to wait 2/3 months to claim it back then go for HP. If you don't want to fork
> out a lump sum for the VAT up front, then go for lease.


 
this is not correct, you do not need to the the lump sum up front.


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## ButtermilkJa (23 Jul 2007)

Niall M said:


> this is not correct, you do not need to the the lump sum up front.


Is this definitely correct? I don't mean to question your knowledge, it's just that I was told only last week by my financial adviser in my bank that if I wanted to claim the VAT back in one lump sum I would have to pay it myself first.

I assumed this was correct. It seems reasonable, as how could I claim back VAT I had never paid in the first place?


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## woods (23 Jul 2007)

ButtermilkJa said:


> how could I claim back VAT I had never paid in the first place?


Perhaps it is considered that the finance house has paid it on your behalf.


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## ButtermilkJa (23 Jul 2007)

woods said:


> Perhaps it is considered that the finance house has paid it on your behalf.


Perhaps? But, if they put up the full cost (with VAT) for the vehicle, and then I claim the VAT back in a lump sum, my repayments to the bank will be ex-vat, will they not? So will they not be out of pocket for the VAT they paid?


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## Niall M (24 Jul 2007)

ButtermilkJa said:


> Is this definitely correct? I don't mean to question your knowledge, it's just that I was told only last week by my financial adviser in my bank that if I wanted to claim the VAT back in one lump sum I would have to pay it myself first.
> 
> I assumed this was correct. It seems reasonable, as how could I claim back VAT I had never paid in the first place?


 
Definately correct, HP is treated differently to a lease. A Hire purchase is essentially treated as a loan, whereby you are borrowing for an asset. 

You can definately claim the vat straight back.


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## Ron Burgundy (24 Jul 2007)

ok well this is what i intend doing.

Trading in my x trail in Jan and upgrading to Pathfinder or Jeep. I have a loan of 21k since jan on the X trail and i traded in my own car to buy it.

I'll buy new one in Jan and pay the difference in cash myself, i'll lend it to the company and then take it back when i get the VAt back.

Is this possible and if not i'll stick with the x trail.


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