Q&A – VAT claim for a personally owned van

Q. I’m the only director of my company and I own all its shares. I bought a van in my name but I intend to use it in the company’s trade. Can the company reclaim the VAT included in the purchase price?

A. If the van was purchased and used privately or for a different business before you started your company, it is not entitled to reclaim any of the purchase VAT. However, if you bought the van for use in the business, even before the company was formed, your company can reclaim some or all of it. If you intend to use the van only on business you can reclaim all the VAT, whereas if you expect there to be some private use you should estimate how much and reduce your claim proportionately.

If the van was not originally bought for the business, you can’t reclaim the VAT included in the purchase price. Conversely, if the van was bought for your company’s business, even though it’s in your name, you can reclaim it. You must reduce your claim proportionately for any private use.