Input tax on cars, personalised number plate and exercise clothing

The taxpayer claimed input tax on its October 2020 return. It had been registered for VAT since 2017 specifying its main activity as ‘weddings and events’. Most of the input tax related to the purchase of two Audi cars which the taxpayer claimed was relevant to a private hire operator licence obtained from the local council in October 2020. In other words it could claim input tax because the vehicles qualified as taxis.

HMRC disputed the use of the cars stating that vehicle insurance was in place for social domestic and pleasure (SDP) use but not for ‘the carriage of passengers for hire or reward’ thus the taxpayer must have intended to make the cars available for private use. The taxpayer claimed they were never used for private journeys and produced a mileage log of trips carried out.

The personalised number plate ...