Following a recent meeting of ECOFIN, the EU’s Economic and Financial affairs Council, the restriction on input tax recovery for certain car leases in the UK has been extended.

Currently, the UK tax authorities (HMRC) has a derogation which allows them to restrict input tax recovery by a taxable person to 50% where a car lease consists of both business and private use. This restriction applies to both UK established taxable persons, and non-resident taxable persons (where the supply is subject to UK VAT).

The derogation will remain in place until the earlier of 31 December 2016 or the entry into force of rules determining the expenditure relating to motorised road vehicles which is not eligible for a full VAT deduction.

By |November 20th, 2013|