Why Vans Have VAT

By Ronnie Lawson-Jones
02-01-2020
One of the most common categories of questions we get when it comes to van leasing is the VAT (value added tax) element. Why do vans have VAT and can you claim it back is the subject of today’s useful information blog post.


The relationship between commercial vehicles and VAT

If you intend to use the van for business purposes then it may not have VAT added on or you may reclaim the VAT back at a later date. Because a commercial vehicle is not classed as ‘goods and services’ VAT rates do not apply.

At the purchasing stage ask about the vehicle’s VAT status and whether it has already been paid.

However, on occasion you may see VAT added on to a van’s sales invoice and you may be wondering why that is and whether or not you should go for it based on that.

  • It is a brand new van and no one has paid or claimed the VAT
  • If you purchase a van for private use then VAT may be applicable as value has been added on to the vehicle. This may not apply if the personal use is de minimis.
  • The seller would need to pay VAT on the profit made on the van when selling it and they may add this on the bill, however, it may not be the 20% rate.
  • The van has been sold through finance (HP, PCP, lease etc) and as such the finance is the service.

This is a complicated process but it doesn’t need to be. If someone somewhere has already paid the VAT on the van then it can be absent from the invoice. If you are purchasing from a business or person who is not VAT registered then they can’t charge VAT (and have to pay it themselves) - but you can also not claim it back, either, as there is no VAT to claim back.

Someone has to pay the VAT on commercial vehicles at some stage, the difference being that someone claims it back. However, HMRC would not want to see no VAT paid as then the numbers do not match up.

Top tip: If you are VAT registered then you claim it back. If you’re not VAT registered look for vans which are advertised as VAT paid.

The final thing to remember is that unless you are VAT registered you can not claim any of it back!

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