Readers’ forum: Hijacked

One of my private clients who is registered for VAT as a computer consultant was recently involved in an unfortunate incident where his business car was hijacked by two men while he was waiting in the vehicle at traffic lights. The end result was that the car was found two days later in a field burned out and a complete write off.

The car in question was on lease hire and the leasing company has advised that a final leasing payment of £19 050 will need to be made by my client. I understand the phrase is a ‘termination payment’. The leasing company has said that this payment includes 20% VAT but is this correct? After all my client is not buying the car – surely it is a compensation payment to the leasing business? ...