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The taxpayer, Hellesdon Leather and Cloth
Company, claimed input tax in relation to the purchase of a
motor vehicle, entertainment expenditure, clothing
expenditure, and meals/trips expenditure. He claimed the
vehicle was used solely for the purpose of business.
HMRC argued it was not sufficient for the
appellant to purchase a vehicle for the purpose of business
use; for VAT purposes, the car must not be ‘available for
private use’: there had to be a specific insurance or
contractual restriction to prevent private use.
With regard to the claim in respect of the
clothing and meals/trips, the taxpayer had shown the
expenditure was on goods or services used or to be used for
the purposes of the business, thus his appeal in relation to
this was allowed.
The taxpayer’s appeal in respect of the
vehicle and entertainment expenditure was dismissed.
Independent VAT consultant Neil Warren said,
‘The argument that input tax can be claimed on a car has
been tested on many occasions in the courts. The only time
when input tax can be claimed is if the vehicle is a tool of
trade, for a car-hire business, driving school or taxi firm,
or when it is a genuine pool car not linked to any
particular employee and not kept overnight at the home of
employees.’.
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