Motor industry association
squares up to the UK tax office over VAT.
Go deeper with GlobalData
The BVRLA has called for the
current VAT recovery rate of 50% on leased fleets to be raised, and
has accused HM Revenue & Customs (HMRC) of ignoring its
advice.
A recovery rate of 70% would more
accurately reflect actual business mileage, according to figures
compiled by BVRLA. The overpayment is estimated to amount to £300m
a year.
BVRLA’s figures take account of
data from more than 120,000 drivers covering nearly 2.5bn miles.
They show that leased fleet vehicles are on average used 70% for
business for at least three years.
John Lewis, BVRLA chief executive,
wrote in a letter to HMRC: “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.”
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By GlobalDataBVRLA has accused HMRC of ignoring
its advice despite having been asked for input.
“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,” said Lewis.
A spokesman for HMRC said: “We have
not rejected the BVRLA’s call to increase the VAT recovery for
leased cars.
“However there have been a number
of factors to consider and we have not been able to conclude our
discussions with BVRLA in time to meet the very tight deadlines for
renewing the current derogation, which runs out at the end of this
year.
“The current rate of 50% broadly
reflects the business use of leased vehicles across all sectors and
therefore continued use of this rate will not have a significant
impact on the amount of VAT that UK taxpayers are required to
pay.
“We will continue to work with the BVRLA and our joint findings
will be used to inform future derogation renewals.”
