Commentary

BB/16B/04 VAT—definition of a motorcar

Part V16 Forms and other HMRC material

BB/16B/04 VAT—definition of a motorcar

BB/16B/04 VAT—definition of a motorcar

Business Brief, Issue 16. 9 June 2004

This Business Brief clarifies Customs' interpretation of the definition of a motorcar as contained in the Value Added Tax (Cars) Order 1992.

Background

The UK operates a “block” on the deduction of input tax on the purchase of a vehicle that is defined in VAT legislation as a motorcar. As a result of this block, most businesses that purchase motorcars are unable to recover the VAT they have incurred. In broad terms, the purpose of the block is to prevent recovery of input tax on vehicles whose physical attributes make them suitable for private motoring. It is important, therefore, for business to know the status of their vehicles under the terms of the legislation, as this will affect the deductibility of VAT on their purchase.

The clarification is necessary in the light of recent developments in the car-derived van market, which have resulted in the manufacture of vehicles that have

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