New VAT rules for disabled drivers

The cost of buying and adapting a disabled motor vehicle is set to increase with the introduction of new VAT rules on New Year’s Day.

From 1st January concessions from the taxman that allow motor vehicles supplied to wheelchair users to be treated as zero-rated for VAT purposes if the vehicle was adapted shortly after it was supplied, will no longer apply.

Ruth Corkin, VAT Manager at accountants and business advisers James Cowper explained: “Zero-rating will continue to apply on motor vehicles that are adapted before the vehicle is supplied. It therefore seems likely that garages will in future recommend to their customers that any alterations are made as part of the specification of the purchase.”

Ruth added: “The Government announced in December 2010 that the VAT concession would be withdrawn to allow businesses and customers a year to prepare for the change.”

The new rules have been introduced because HM Revenue and Customs does not have the discretion to continue with the current concessionary treatment under EU law.

Ruth Corkin, VAT Manager, James Cowper LLP, Tel +44 (0)1865 200500 or email rcorkin@jamescowper.co.uk

21.12.11