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VAT ON MOBILITY TRANSACTIONS
08/10/2007
Car dealers can expect disability audits
Accountants at leading mid-tier firm, Baker Tilly, have become aware of a number of instances in the last few months where HM Revenue and Customs (HMRC) has carried out disability audits at car dealers' premises. Following these visits, HMRC have raised assessments for VAT underpaid on the supply of cars adapted for disabled persons.
According to VAT Partner, Steve Hodgetts, "VAT law allows dealers to zero-rate motor vehicles where the supply is made to a disabled person for their domestic or personal use, or to a charity for onward supply to a disabled person. HMRC take the view that 'personal use' means that the goods must be used specifically by an eligible individual. It does not include supplies of cars to an individual who then supplies the cars (by sale, lease or otherwise) for business purposes."
Where HMRC observe that multiple sales of cars have been made to individuals, they maintain that any declaration by the purchaser should be rejected as the cars are being bought for business purposes and are not for personal use. Equally, assessments can be made on the basis that the cars are not 'substantially and permanently' adapted for use by disabled persons. Consequently, VAT is due on the sale of these cars.
"Car dealers should take this opportunity to review their records and ensure VAT has been correctly applied in advance of any visit by HMRC", Hodgetts concluded. For more information contact Steve Hodgetts, VAT Partner on: 0121 214 3138 or email: steve.hodgetts@bakertilly.co.uk