Input tax claim on the purchase of new cars

The taxpayer traded in the computer industry charging daily fees of between £3 000 and £5 000. He felt that it was important that he had prestige cars to indicate he was running a successful business. He claimed input tax of £20 805 on his March 2017 VAT return on three cars an Audi A8 Mini Cooper S and a Porsche Cayenne.

HMRC disallowed the claim on the basis that the vehicles were available for private use. The taxpayer said they were used exclusively for business and were never available for private purposes. Each family member had their own car for private journeys; the keys for the business cars were kept in a locked safe and only retrieved for business trips. A mileage log showed that 93% of trips were carried out for long business journeys with the other 7% for shorter trips which the taxpayer...