VAT

VAT and Disabled Vehicles

We all know what VAT is, but when it comes to purchasing a disabled vehicle; VAT can be a bit confusing. Here at Mobility Disabled we are a VAT registered company which has the ability to provide adapted motor vehicles free from VAT charges provided that they are used for disabled purposes. So that means when you purchase a disabled vehicle your entitlement to VAT relief is at the point of sale, you don’t have to re-claim VAT and wait for a refund.

Disabled individuals are entitled to a number of things (not just vehicles) with VAT relief and if you visit the gov.uk web site there is lots of information on there about what VAT relief is and how you can get it and claim it if you are eligible. For the purpose of this information here we are concentrating solely on the supply of disabled vehicles.

Visit www.gov.uk

Purchasing a Disabled Vehicle (private use for a disabled individual)

All the prices that we list on our web site for our disabled vehicles are excluding VAT as we assume that a disabled individual is purchasing an adapted motor vehicle for disabled use. When we sell a vehicle to a customer we will ask them to complete two forms (which are supplied by HMRC). These forms are used for the purpose of claiming VAT relief on our disabled vehicles and copies are sent to HMRC.

Under the Value Added Tax Act 1994 there are four conditions that must be met to claim relief include:
- you’re normally a wheelchair user
- it’s only purchased for personal and domestic use
- the vehicle has been permanently and substantially adapted to meet your requirements
- you haven’t (since 1 April 2017) obtained a VAT free vehicle under this relief in the past three years (known as the 3-year rule- see below)

When a disabled vehicle is delivered to or collected by a customer who intends to use the vehicle for disabled purposes; these exemption forms will need to be completed. If you are not able to complete these forms your nominated representative can do them for you. Please contact us for any clarification on this or contact HMRC for advice.

Purchasing a Disabled Vehicle (for another purpose)

If you have no intention of using a disabled vehicle for its intended use, perhaps you are wishing to convert the vehicle into a micro camper, for electric bike transport or a dog walking vehicle or some other use that was not what it was originally created for, you can still purchase a disabled vehicle from us and will not be expected to complete VAT relief forms. Disabled vehicles used in this way can be supplied using the second-hand margin scheme which does not affect the customer and is solely used for our VAT accounting purposes. Also, if you wish to purchase a vehicle for taxi or private hire use, it will be sold to you under the second-hand margin (unless of course you are registered for VAT, then the price will be plus VAT and an invoice issued accordingly).

Purchasing a Disabled Vehicle (for a charity)

Charitable organisations can purchase an adapted motor vehicle that has been substantially and permanently adapted to carry at least one disabled person in a wheelchair and so it will be zero-rated (i.e. no VAT will be charged).

What is The 3-Year Rule?

With effect from 1st April 2017, VAT relief is only allowable on one adapted vehicle, purchased (either outright or through a finance lease) for the personal use of the disabled wheelchair user, in a period of 3 years. This is known as the '3-year rule'.

The 3-year period begins on the date that a supply of a zero-rated adapted vehicle is made to a disabled wheelchair user or their nominated representative. The 3-year rule applies to all zero-rated adapted motor vehicles whether purchased within the UK or imported.

An individual or their nominated representative is required to certify with their supplier that they satisfy the 3-year rule and there are penalties for providing an incorrect customer eligibility declaration.

If an individual or their nominated representative wishes to purchase additional adapted vehicles within any 3 year period, then they can do so but they must pay the standard rate of VAT on the purchase of any subsequent vehicle.

Exemptions to the 3-Year Rule

There could be occasions when there are reasons why a disabled person needs to replace an adapted motor vehicle within a 3-year period and the normal rules can be waived. These are when:
• the vehicle has been stolen
• the vehicle has been destroyed or damaged beyond repair in circumstances beyond the control of the disabled personal
• the disabled wheelchair user's condition changes and because of this the vehicle is no longer suitable for use by that person.

In order for an exception to the 3-year rule to be made you will need to provide additional information evidence to:
• the supplier of you vehicle – if your previous vehicle has been stolen or destroyed or damaged beyond repair you'll need to provide information from insurers, police or details from the garage writing-off the vehicle.
• HMRC – if your condition has changed significantly and your adapted vehicle is no longer suitable to meet the needs of your condition, you'll need to contact HMRC.

HMRC will then consider the case and send you a letter confirming whether or not the 3 year exception is met. The supplier won't be able to zero-rate their supply to you without this confirmation letter.

For any clarification on the VAT for Disabled Vehicles please get in touch and we will be happy to help.