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Businesses deserve a better deal on VAT reclaim, says BVRLA

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The BVRLA is urging the Government to support its call for businesses to be able to reclaim 60% of the VAT on hire or lease payments.

Having surveyed a wide variety of companies for their leased business cars’ mileage data, the BVRLA has been able to provide clear evidence that more than 60% of the total miles travelled annually by leased cars is for business use.

At present, businesses can reclaim 50% of the VAT incurred on the finance element of a company car lease or hire, and the European Commission has to approve this ‘derogation’, which requires the UK Government to justify and renew it every three years.

The 50% rate has been set since 1995, and the current arrangement comes to an end on December 31, 2016.

Gerry Keaney, chief executive of the BVRLA, said: “The results of our 2015 survey provide robust evidence that the UK Government should now renew the VAT derogation to ensure UK firms leasing cars are able to lawfully and fairly reclaim 60% of the VAT paid on the finance element of hire or lease payments.”

The BVRLA has provided HM Revenue and Customs with the evidence from more than 61,000 leased vehicles used for business and private use.

Between them, these drivers had covered more than 795 million miles in the past calendar year.

The BVRLA’s sample of small and large businesses included firms that do and do not use a mileage capture system, and covered a wide range of industry sectors.

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