Fleet News

Tax recovery rate should be cut to 35-40%

The BVRLA’s call for the VAT recovery rate for company cars to be increased from 50% to 70% has been brought into question.

Alastair Kendrick says a reduction to 35-40% would better reflect the level of business-use fleets now experience with their vehicles.

European rules normally prevent businesses from recovering any VAT for goods and services if there was any element of non-business use. However, for the last 15 years in the UK there has been an allowable recovery of 50% for company cars. The fixed rate has avoided the need for drivers and their employers to account for all the miles driven on business and private use.

But for the UK to behave differently, it has to make a case every three years and in making this case now the BVRLA is arguing that a 70% recovery rate would more accurately reflect the average 30% private benefit.

However, Kendrick remains unconvinced. “I have a number of concerns,” said the Mazars director. “Where did the average level of business mileage come from? It cannot be right.

“The level of business mileage is reducing and if you take account of perk drivers the average must be substantially below 50%. I have talked to a number of people and the general view is the average is more like 35 to 40%”

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  • amd - 13/07/2010 11:28

    I would say that Mr Kendrick needs to substantiate his claims, "talking to a number of people" is extremely vague and hardly what you would expect from a company such as Mazars. I'm guessing that "the number of people he has spoken to" are in his office who enjoy company cars as a perk....?

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