Commentary

V16.983 VAT—motor manufacturer's company cars, dealer demonstrators, daily rental cars

Part V16 Forms and other HMRC material

V16.983 VAT—motor manufacturer's company cars, dealer demonstrators, daily rental cars

V16.983 VAT—motor manufacturer's company cars, dealer demonstrators, daily rental cars

Information Sheet 8/11, April 2011

1 Introduction

1.1 What is this Information Sheet about?

This Information Sheet should be applied when using the simplified method of calculating VAT on private use of company cars, demonstrator vehicles and rental cars, otherwise known as the “car averaging” calculation. VAT Information Sheet 7/09 set out changes to the value based bands in the car averaging calculation and should be read in conjunction with this Information Sheet. This Information Sheet updates the tables to take account of the increases in the standard rate of VAT.

The value based bands in the tables below are aligned for these purposes with the bands used to calculate a company car benefit for National Insurance contribution purposes to simplify procedures for affected businesses.

This does not alter the basis of the calculations agreed with the relevant trade bodies which mean that businesses are not required to carry out complex private use calculations.

1.2 Who does affect?

It affects motor dealers, manufacturers and concessionaires, daily rental companies and contract hire companies who are entitled to reclaim VAT on the purchase of cars but who are required to account for output tax on the private use of a car. These businesses have the option to use the simplified car averaging calculation under the terms of the existing administrative agreements between HM Revenue & Customs (HMRC) and the Society of Motor Manufacturers and Traders Limited (SMMT), the Retail Motor Industry (RMI) Federation and the British Vehicle Rental and

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