Fleet News

Contractor wins VAT recovery appeal over Isuzu Trooper 'van'

A SMALL forestry contractor has a won a tax battle with HM Customs & Excise regarding the VAT treatment of an Isuzu Trooper.

Charles and Susan Paterson had treated the 4x4 like a commercial vehicle, and had therefore recovered input VAT on the vehicle.

The company had instructed the supplying dealer to remove the rear seats, rear seat belts and carpets to adapt the car for the needs of the forestry business. But Customs insisted the vehicle was a car, and therefore that VAT recovery should be blocked.

The tribunal ruled, however, that the appellants had taken positive steps to render the vehicle wholly unsuitable for private use. It therefore allowed the company to recover the VAT.

According to PricewaterhouseCoopers, the 'steps a taxpayer has to take to make a car unavailable for private use remains unclear. The chairman in this case makes the point that insurance cannot necessarily be determinative since the taxpayer could use the car (albeit illegally) for private use even if it was insured solely for business purposes.'

The financial services firm expects further disputes on this issue.

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