UK VAT Derogation
The European Commission is proposing to extend the VAT derogation applied by the UK on the hire or lease of some passenger cars.
According to the proposal, the Commission seeks authorisation for the UK to continue to apply a derogating measure from the VAT Directive as regards the restriction of the right of deduction to 50% of the input VAT incurred on the hire or lease of motor cars not exclusively used for business purposes. In addition, where the right to deduct has been limited, the taxable person is relieved from accounting for VAT on the private use of the vehicle.
A copy of the proposal is available at http://ec.europa.eu/taxation_customs/resources/documents/common/whats_new/COMM_PDF_COM_2007_0752_F_EN_ACTE.pdf.