Vertex CyberTax News

UK Requests Extension of Derogation for Leased Passenger Cars

In response to a request from the United Kingdom, the European Commission has put forward a proposal to the Council to authorize the UK to continue a derogation regarding leased passenger cars.

Under the derogation the UK applies a restriction of the right to deduct 50% of the input VAT incurred on the hire or lease of passenger cars used by taxable persons for both business and private use.

The proposal also requests that the private use by taxable persons of such leased or hired cars not to be considered as supplies of services for consideration. The derogation eliminates the need for the hirer or lessee to keep detailed mileage records to document the private use and account for VAT on the private use.

The derogation has been renewed several times dating back to 1995 and was due to expire on December 31, 2007.

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