VAT zero rating of qualifying vehicles for disabled users: Changes to rules
Of interest to motor dealers, charitable bodies and disabled persons will be the changes with effect from 1 April 2017 to HMRC’s rules around the VAT zero rating of qualifying vehicles for disabled users.
Relevant parties will know that under qualifying conditions, vehicles that would normally be subject to VAT but which are designed or permanently adapted to meet the needs of a disabled user may instead be supplied to them without VAT being charged.
Briefly, the changes to the existing zero rated rules are that: -
- With some exceptions, there is now a limit of one to the number of vehicles that can be supplied to an individual with zero VAT during a three-year period;
- Declarations of eligibility are mandatory – they must be provided by the customer and collected by the seller;
- Suppliers of zero rated vehicles must provide information to HMRC on all transactions;
- Penalties have been introduced for any person who provides an incorrect eligibility declaration.
If you would like advice in this area please do get in touch with one of the team or have a look at the new HMRC Notice 1002