Commentary

V7.442 Input tax recovery on the purchase of motor cars

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.442 Input tax recovery on the purchase of motor cars

Part V7 Tax planning | Commentary

V7.442 Input tax recovery on the purchase of motor cars

In general terms, input tax cannot be reclaimed on the purchase of a motor car – even if it is purchased by a business that wholly makes taxable supplies and intends to use the vehicle for mainly business purposes. The key test is not whether a car is 'solely' used for business purposes but whether it is 'available for private use'. If the vehicle is available for private use, then the input tax claim is blocked. For the vehicle to be blocked from private use, there needs to be a physical restriction in place to prevent private journeys, eg an insurance policy that does not allow journeys to be made if they are for social, domestic or pleasure. Purchase means not only outright purchase but also any purchase under a

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