BVRLA calls on HMRC to make VAT recovery fairer
BVRLA (British Vehicle Rental And Leasing Association) have called on HM Revenue & Customs to increase the current 50% VAT recovery rate available to businesses leasing cars to be increased to allow a fairer level of VAT recovery in light of new business mileage data compiled by the BVRLA that clearly shows that the current recovery rate is too low and the UK’s leased fleets could be overpaying millions in VAT.
Data from more than 120,000 drivers covering nearly 2.5 billion annual miles show that business usage (excluding commuting) is responsible for around 70% of distance travelled. The data proves that this business-private ratio of mileage has been in existence for at least three years and whilst the current rate of reclaim may have been correct in the past, the government’s policy of taxing low business mileage users into cash for car or ECO schemes and also taxing company car drivers out of company provided fuel has led to a significant shift in mileage patterns.
The UK’s VAT treatment on leased cars is reviewed and approved by the European Commission every three years. It is with deadline due at the end of this year that BVRLA saw an opportunity to challenge HMRC to try and seek an improved recovery rate.
However, the government department has chosen to ignore the huge weight of evidence presented by the BVRLA and decided that the recovery rate should be maintained at its current level.
“There is nothing we can do to prevent VAT rising to 20% in January, but we will do our utmost to ensure that leasing customers are treated fairly when it comes to paying it,” said BVRLA chief executive, John Lewis.
“HMRC has chosen to ignore the very robust data we provided in favour of a much smaller sample of 418 drivers based on an anecdotal survey conducted by the Department for Transport, which conveniently backs its own position.”
The BVRLA is writing to HMRC, calling on it to reflect the true business mileage position shown by its data. It is also refuting the department’s justification that the 50% recovery rate is a ‘simple figure’ that ‘businesses are familiar with’.
“Before we were asked to contribute to HMRC’s research on this issue we would probably have been happy to stick with the status quo, but on the basis of the new and very robust data, doing nothing is not an option,” added Mr Lewis.
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