HMRC has issued a consultation on proposals to reform the VAT zero-rate relief on motor vehicles that have been substantially and permanently adapted for use by a wheelchair user following a spike in avoidance related tax cases concerning such vehicles
The reform is required as the relief, which is meant to help mitigate the extra costs and losses incurred in purchasing an adapted vehicle, has become subject to abuse, said HMRC.
The consultation sets out the following proposals:
- reform the VAT zero rate for adapted motor vehicles for disabled wheelchair users so the relief is targeted on those who need adapted vehicles;
- limit the number of adapted motor vehicles a disabled wheelchair user can purchase in a given period;
- define the terms ‘substantially’ and ‘permanently’ in the legislation;
- require suppliers to submit details of zero-rated motor vehicle sales;
- make the use of eligibility declarations mandatory;
- ensure it is clear that users of lower limb prosthetics can benefit from the relief;
- remove references to stretcher users from the legislation; and
- It is also proposed that any relevant changes in respect of the relief on adapted motor vehicles are similarly applied to the zero-rate relief on the purchase of adapted boats.
The consultation closes on 19 September 2014.
The consultation document is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/325115/VAT_and_Adapted_Motor_Vehicles_Consultation.pdf