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Thread: VAT on used Motorcars

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    VAT on used Motorcars

    Hi my Name is Uschi and a first time user.

    I have a question:
    We have a car hire company, if we buy car's we do not claim the VAT stated on the invoice. We got told on motor vehicles we can not claim the VAT.
    If we sell the car later as used car we do not invoice with VAT. We could not claim the VAT so we do not charge VAT when we sell.
    Is that the correct way of dealing with this. Please someone advice.

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    VAT on used Motorcars

    Hello all, I need urgent advice.
    We are a car rental company. And any vehicles we buy we can't claim the VAT. So far so good.
    If we sell a motor vehicle to a dealer, the dealer doesn't pay the VAT amount, so we invoice without VAT is that the correct procedure?

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    Quote Originally Posted by Uschi View Post
    Hi my Name is Uschi and a first time user.

    I have a question:
    We have a car hire company, if we buy car's we do not claim the VAT stated on the invoice. We got told on motor vehicles we can not claim the VAT.
    If we sell the car later as used car we do not invoice with VAT. We could not claim the VAT so we do not charge VAT when we sell.
    Is that the correct way of dealing with this. Please someone advice.
    If I remember correctly when you sell the car you do charge VAT (because cars still have vat on them, just the buyer can't claim it), and then you claim back input VAT on the motor vehicle as it is a deemed Change in Use adjustment as you sold the car and have to pay vat ... however, you do not claim 14% of the first invoice ... I can't quite remember how the calc. goes ... I will need to double check for you.
    If you need any Accounting, Tax or even Financial Management advice, PM me and I'll try help and keep your information confidential.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Uschi View Post
    We are a car rental company. And any vehicles we buy we can't claim the VAT.
    Hold on a bit there. By my understanding if you're renting them, you can claim the input VAT.
    The trouble with opportunity is it normally comes dressed up as work.

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    Uschi (25-Aug-10)

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    Hi, did some digging and Dave is right. You can claim the Input VAT on the Cars.

    S17(2) of the VAT act states that input VAT on motor vehicles cannot be claimed except in a few circumstances. Renting is one of them:

    c) in respect of any motor car supplied to or imported by the vendor: Provided that-

    i) this paragraph shall not apply where that motor car is acquired by the vendor exclusively for the purpose of making a taxable supply of that motor car in the ordinary course of an enterprise which continuously or regularly supplies motor cars, whether that supply is made by way of sale or under an instalment credit agreement or by way of rental agreement at an economic rental consideration
    If you need any Accounting, Tax or even Financial Management advice, PM me and I'll try help and keep your information confidential.

    Visit my Android ZA website - a website dedicated to Google Android in South Africa - www.androidza.co.za

  8. Thanks given for this post:

    Uschi (25-Aug-10)

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