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January Question and Answer Section

Newsletter issue - January 2013.

Q. If I purchase a Land Rover Defender for use in my partnership business can I reclaim the VAT paid on the purchase? I will use the Land Rover 75% for business and 25% for private journeys.

A. You first need to check that the specific model of Land Rover Defender is regarded as a commercial vehicle for VAT purposes by HMRC. We can make this check for you.

If HMRC agrees the Defender is a commercial vehicle, you can reclaim 75% of the VAT paid on the purchase, on the basis that it will be used for business purposes for 75% of its useful life. You should keep accurate mileage records of all your business journeys so you have evidence of the business use of the vehicle, in case HMRC ask you to prove the business use percentage. If the percentage of business use of the vehicle changes you may have to make an adjustment to your VAT return.

Q. The Christmas feasting has taken its toll on the waistlines of everyone in our company. Can I give the workforce a boost by having the company pay for gym membership for me and all my staff?

A. A company may provide sports or recreational facilities for its workforce, but unless those facilities are used mainly by current and former employees with exclusion of the general public, there will be a benefit in kind tax charge for the employees and the company. A membership for a gym open to any paying member from the general public would be taxed as a benefit for employees, the taxable value being the cost to the company of providing that membership.

Q. My business has started exporting goods. I've heard I need an EORI number. What is it, and how do I get one?

A. The Economic Operator Registration and Identification (EORI) scheme started on 1 July 2009 and replaced the previous TURN system. The EORI provides a unique number for a business to quote to any Customs authority in the EU, for example when the business needs to make a customs declaration when goods arrive or depart from the EU.

If your business had a number under TURN, it should automatically have been issued with an EORI number. If your business is VAT registered in the UK you need to complete form C220 to obtain an EORI number, if you are not VAT registered the form to complete is C220A. We can obtain and file these forms for you.