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Concern at new restrictions
on VAT relief for disabled people buying cars
THE Low Incomes Tax Reform Group (LITRG)
is concerned at a Tax change which could increase the costs for disabled people
of changing their motor vehicle and leave them unable to change to a more
suitable vehicle.
From 1 April 2017, the Government will restrict the availability of
0 rate
VAT for the purchase of adapted motor vehicles for eligible disabled users, to 1
car every 3 years. It says there has been abuse of this relief in the past, with
some people purchasing numerous adapted vehicles in a single year, removing the
adaptations and then selling the vehicles on for a profit.
Instead of restricting the relief to tackle the Tax abuse and, as a result,
potentially raising the cost of motor vehicle ownership for some disabled people
who genuinely need it, LITRG suggests HMRC should improve the administration of
the existing relief by gathering and matching data from car dealers and
licensing authorities, using modern technology and then taking compliance
action. This could be largely automated to avoid putting much strain on HMRC's
staff resources.
Anthony Thomas, LITRG Chairman, said:- "We welcome the relaxations that
are planned within the new rules, but these do not go far enough to stop the
lifestyle of genuine users of this important Tax Relief being adversely
affected. We particularly question why there will be an exception to the
restrictions if a person's condition changes, but not for life changes. It seems
unduly harsh that a disabled person should be denied Tax Relief on the extra
costs they incur when changing their motor vehicle, for instance in a simple
situation such as their family having grown so that they require a larger
vehicle. To deny the relief in circumstances such as a baby arriving would seem
to be inequitable."
LITRG is also hugely concerned at the lack of a right of appeal within the new
provisions, thus making
HMRC sole judge of whether a vehicle continues to be
suitable relative to the disabled user's condition. The group questions whether
HMRC staff have the expertise to make such judgements. It is also concerning
that the user will be required to disclose potentially intrusive personal
information in order that HMRC can make that judgement.
Anthony Thomas said:- "The proposals seem very much like a blunt
instrument to prevent abuse, but regretfully may equally prevent genuine users
from obtaining relief; either because they do not qualify, or because the rules
are so complex that they think they do not qualify or perhaps even the threat of
a penalty for getting it wrong puts them off." |
