If you’re a VAT registered company with a fleet of vehicles, or company cars – or even if you’re a small business who use vehicles for work – then you REALLY need to know about your VAT liabilities…
Why? Because HMRC could investigate after a routine check.
So, let’s take a look at everything you need to know about VAT on car repairs – plus fuel and other motoring expenses associated with your business.
CAN YOU RECLAIM VAT ON CAR REPAIRS?
Yes – any VAT on car repairs (or van repairs for that matter) or servicing can be reclaimed as input tax, provided that:
- The business pays for the repairs
- The car or van is used by the business
It’s okay if the vehicle gets personal use, and it doesn’t matter if fuel allowances are (or are not) claimed, too.
But what about sole traders? Well, if your car is solely for your own personal use, and not for business, you cannot reclaim the VAT on car repairs or any servicing costs.
But if you have to drive for jobs, you can submit your mileage, and claim back for fuel and “wear and tear” associated with driving.
VAT FOR FLEETS: REPAIRS, SERVICING AND MORE…
The VAT paid on fleet management and parking charges (not fines!) can also be reclaimed as input tax. Same goes for fuel – as long as petrol or diesel was bought for business motoring only (not personal use). That is, unless you can account for the VAT on fuel used personally…
It can be tricky to do this properly, because you need to keep detailed mileage records – and that’s tough when vehicles change hands regularly. But, it’s the only way to calculate how much fuel was used by the business, and how much was used for personal driving.
The bigger issue is likely to be claiming back VAT on fleet servicing and repairs, especially in accident-prone roadgoing industries.
The same rules apply, though: any VAT on fleet repairs can be reclaimed as input tax, as long as the business pays for the repairs, and the car or van is used for work by the business.
Back to accident-prone fleets…
CAN YOU CLAIM VAT ON CAR REPAIRS COVERED BY INSURANCE?
The HMRC and Government guidance relating to reclaiming VAT on car repairs made through insurance claims is tricky, and it can get complicated depending on when and where the loss or damage occurred. Liability can change depending on whether the vehicle was at an employee’s home, on the road, in or out of work hours… like we said – it’s tricky!
But the crux of the point is found here:
“The supply of goods (or services in the case of repairs) is considered to be made to the policy holder. This is so even when payment is made directly to the supplier by the insurer…Subject to the normal rules, a VAT registered policy holder may treat any VAT incurred on the supply as input tax. The insurer will normally pay the policy holder compensation exclusive of VAT. The policyholder will pay the supplier the tax and recover it as input tax.”
Basically, what this is trying to say is – YES, you can claim the VAT on car repairs covered by insurance, even if they pay the supplier on your behalf.
This is because the insurer owes YOU for the total value of the loss. This means that, by paying VAT on car repairs covered by insurance, you technically incur a further cost before taxable profit.
If you use a car for work, or operate a fleet of vehicles at your company – book your car repairs with Master Tech Autos. We’ll give you all the paperwork you need to reclaim your VAT.
BOOK CAR REPAIRS IN EASTLEIGH
Whatever the future holds, we’ll keep your car running like new. Book car repairs in Eastleigh, with Master Tech Autos. Call us on 023 8061 1161 or book online today!