Discussion:Value Added Tax Deduction
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Value Added Tax Deduction
No regrets (talk|edits) said: | 1 July 2008 |
| I have a client who bought a car from England and i was curious as to whether or not i could deduct the value added tax (also known as a goods and service tax)like you can deduct the sales tax on the car. I'm thinking the answer is no but i wanted to know if anyone else could give any insight. That'd be great. Thanks | |
| 1 July 2008 | |
| No only local state and local general sales tax paid in USA can be deducted on Schedule A under sales tax.Was the car ever used in England ? If not and the intended purpose was to ship directly and use in USA there might be an opportunity to get a refund of the VAT from England. Maybe someone else with VAT experience can comment on this also. | |
| 1 July 2008 | |
| Also, when the car is registered in the client's home state it is likely to be subject to use tax, unless some exception applies. That would be a deductible sales/use tax.
Bear in mind that the alternate sales/use tax deduction expired in 2007. A one-year extension is part of the extenders bill (H.R. 6049) that I believe is still hung up in the Senate, having passed the House in May. | |
No regrets (talk|edits) said: | 3 July 2008 |
| So does anyone know how one would go about getting that VAT refunded, if at all possible. The vehicle was never used in England | |
| 3 July 2008 | |
| See this link: http://www.hmrc.gov.uk/vat/consumers-vehicle.htm#4 This would appear to come under the Personal Export Scheme.
It looks like your client should have taken care of this at the time the vehicle was purchased. I don't see any instructions for claiming a refund after the fact. In fact, Notice 705 (there's a link to it at the bottom of the page referred to above) says this is a rule that has the force of law: "Note: You will not be able to obtain a refund of VAT on a motor vehicle where the purchase price paid included VAT even if the vehicle is later exported to a destination outside the EC." So I think your client is SOL now. | |
