Claiming Back the VAT on Commercial Vehicles

VAT on commercial vehicles

Many businesses have this idea that it is allowed for them to claim the amount of VAT on the vehicles that they use for commercial use. Just as we know that the VAT is blocked on cars even if they are being used for business purposes. For a better idea, a basic understanding of what exactly is VAT on commercial vehicles is imperative to know. Many of you also might think that it is an easy job to identify the vehicle that is being used for commercial purposes. This is not as simple as it might seem because there are many vehicles that are manufactured by companies in a way that they can possibly be used for dual purposes.

This article will help you to know further about what exactly are commercial vehicles, what are dual purpose vehicles, how to claim VAT on commercial vehicles, and how VAT inspection is carried out by HMRC.


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What are Commercial Vehicles?

Most of the time it will be easy that you can identify a commercial vehicle. Coaches, transit tyres, vans, and HGV are famous examples of commercial vehicles. Moreover, there are a few examples of vehicles that come under the category of commercial vehicles but they are used for dual purposes. They are intentionally manufactured by manufacturing companies in a way that they can be used for dual purposes. Such vehicles are used for business activity as well as for the sake of private use. Rear-seat vans and car-derived vans are examples of dual-purpose vehicles. These are known as combination vans and dual-purpose vans.


What are Dual-Purpose Vehicles?

Many of you must be wondering by now what exactly is known as a dual-purpose vehicle. Derived vans are a famous example of dual-purpose vehicles that are sold as lifestyle vans as well. Such vehicles are easily used for business activities and for private use as well. The outer look of such vehicles is a little similar to the cars, however, the inner is designed by the manufacturers in a way that it can be used for business purposes easily. These vehicles are mostly sold as commercial vehicles.

According to the need, the vehicle can be modified. Like the seats and other parts can be replaced or removed as per the requirement. A list of dual-purpose vehicles was shared by HMRC in the year 2015. This explained the detail of what vehicles come under the category of commercial vehicles and others.


How to Claim VAT on Commercial Vehicles?

Before you plan to claim the VAT on a commercial vehicle, it is imperative for you to have a record of the vehicle for when it is used for business activity purposes and when it was being used for private use. Also, it is important to identify and classify the vehicle whether it comes under the category of a commercial vehicle or not. HMRC tends to check every bit of the detail when the process begins.

The adjustment will be made in the VAT claim if the vehicle is being used for private use as well. However, it allowed you can use the commercial vehicle to be used occasionally for private purposes. You will have to provide proof of the incidental use of the vehicle in this regard. A vehicle that is purely used for business purposes can be claimed for VAT in full. On the other hand, if the vehicle is being used as a dual purposes vehicle, there could be a few restrictions that you will have to consider while you are planning to reclaim VAT.


What is a VAT Inspection Carried Out by HMRC?

During the VAT inspection from HMRC, they usually check if the vehicle is being used for business purposes fully when the claim is made on full business activity. However, if they find out the vehicle is partially being used for personal use as well, you will have to struggle with a few restrictions to reclaim VAT in that case.


The Bottom Line

Now that you have gathered a fair amount of information about VAT on commercial vehicles, we can bring the discussion towards wrapping up. Claiming the VAT on commercial vehicles can sound all benefits, however, the rules to be eligible for the claim are important to understand and follow. This will further help to make a successful claim in this regard. We hope these few minutes of reading will help you to develop a better understanding of VAT on commercial vehicles.


VAT rules become tricky when you have a higher chance of making an error in your submission. Our professional and detail-oriented advisors can help you! Get in touch with us for VAT on commercial vehicles.


Disclaimer: All the information provided in this article on VAT on commercial vehicles, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.