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SI 1992/3222, art 7 restricts the entitlement to deduct as input tax the VAT charged on a motor car:

1. Ìý

   •ÌýÌýÌýÌý supplied to a taxable person

2. Ìý

   •ÌýÌýÌýÌý imported by a taxable person

For the meaning of 'motor car', see V1.293.

The main effects of the VAT legislation in relation to cars are to¹:

1. Ìý

   •ÌýÌýÌýÌý block the recovery of input tax on the supply, acquisition or importation of cars, except where they are to be used exclusively for business purposes, and

2. Ìý

   •ÌýÌýÌýÌý restrict the recovery of input tax on certain car leases to 50%

This exclusion extends to:

1. Ìý

   •ÌýÌýÌýÌý a charge for delivering a new motor car²

2. Ìý

   •ÌýÌýÌýÌý optional extras fitted to a new motor car by the supplier thereof prior to delivery³, and

3. Ìý

   •ÌýÌýÌýÌý motor cars which are dismantled and the dismantled pieces are sold as spare parts under supplies chargeable to tax at the standard rate⁴.