Commentary

V16.855 VAT on business cars—changes to take effect on 1 December 1999

Part V16 Forms and other HMRC material

V16.855 VAT on business cars—changes to take effect on 1 December 1999

V16.855 VAT on business cars—changes to take effect on 1 December 1999

VAT Information Sheet 12/99, December 1999

This Information Sheet describes changes to the VAT treatment of business cars which will take effect on 1 December 1999.

We will issue a further Information Sheet in due course describing changes to the VAT treatment of disposals of business cars which will take effect on 1 March 2000.

VAT Notice 700/64 “Motoring expenses” (Part V8) will be amended once both sets of changes are in place.

1 Introduction

1.1 General

A number of changes to the VAT treatment of business cars will take effect on 1 December 1999. The main changes are—

  1.  

    —     London type taxis and 12-seater vehicles that do not meet road safety regulations to be reclassified as motor cars for VAT purposes;

  2.  

    —     vehicles with a payload of one tonne or more to be reclassified as not being motor cars for VAT purposes; and

  3.  

    —     input tax relief to be introduced for the stock in trade cars of motor manufacturers and dealers.

This Information Sheet describes these changes (sections 2, 3) and the consequential effects upon accounting for VAT on any private use of business vehicles (section 4).

1.2 Law

The changes will be contained in the VAT (Input Tax) (Amendment) Order, SI 1999/2930, the VAT (Cars) (Amendment) Order, SI 1999/2832 and the VAT (Special Provisions) (Amendment) Order, SI 1999/2831 (Part V14).

1.3 Glossary of terms used in this Information Sheet

Throughout this Information Sheet the following terms have the meanings shown—

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