How Disabled People Can Buy a New Adapted Motor Vehicle VAT-Free


The VAT Notice 1002 ‘VAT Relief on Adapted Motor Vehicles for Disabled People and Charities’ can be rather overwhelming and confusing. It covers a broad range of the disabled population, charities and the purchase of second-hand vehicles.

The purpose of this guide, from East Anglia vehicle adaptations specialists Ransome Mobility, is to focus our attention on who is eligible, what vehicles are eligible, what are considered as required adaptations and why and what isn’t. We have also put together a few tips and recommendations on car dealers supplying new adapted motor vehicles. This information is a general guide, and individual circumstances may vary. It is by no means exhaustive but based on our, and our customers’, experiences.

Eligibility

With regards to who qualifies as a disabled person, the answer would be a wheelchair user who usually uses a wheelchair. This is defined as a person either as a lower limb amputee –

although which limb is relevant – or someone with a degenerative condition such as multiple sclerosis. It is not for people who occasionally use a wheelchair as a result of a broken leg or if they use a mobility scooter.

So, if you are either a lower limb amputee with a prosthetic aid or have a degenerative condition but do not use your wheelchair all the time, you are still considered a ‘wheelchair user’.

Eligible Vehicles

The next step is to determine what constitutes an eligible vehicle to purchase at zero-VAT. In short, any car, light van, MPV and motorhome qualifies, provided its carrying capacity does not exceed 12 people, including the driver. There doesn’t appear to be a lower limit – that is, a single-seat vehicle, but there is an implication that a boot is required at the very least to accommodate a folding wheelchair.

This would appear to place an ‘unofficial’ lower limit to a two-seater car with a boot or a single-seater car with a boot, if you can find one. The eligible vehicle must be used for or by the wheelchair user for domestic or personal use which can include commuting to and from work but not if the vehicle is part of a business or business use. The purchase of a motorhome is a special case since more adaptations are normally required to move around inside it. This will be dealt with under Required Adaptations.

Required Adaptations

Once you have selected the vehicle you wish to purchase, this is required to be ‘substantially and permanently adapted’ for you to drive or be driven by an able-bodied person on your behalf. The terms ‘substantially’ and ‘permanently’ are open to interpretation but they are necessary and specific for the wheelchair user to either drive, enter or travel in the vehicle.

These three aspects cover a wide range of wheelchair users, ranging from fully motorised, fixed-frame varieties which require a winch/ramp mechanism to allow entry into the vehicle,  to a folding or portable wheelchair, which can be stored in a conventional boot.

In the case of a wheelchair user driving the vehicle, it must be adapted in such a way to allow them to drive with their disabilities, such as the mandatory use of an automatic gearbox, a left foot accelerator, or a steering spinner with ancillary controls. In the case of a folding wheelchair user, they may get in or out of the vehicle in a conventional manner while using the boot to store the wheelchair.

In the case of a wheelchair user entering the vehicle, it must be adapted to allow them to do this. This would be more relevant to fixed-frame wheelchair users requiring a winch mechanism which could be in place of a driver’s seat. Further adaptations, such as hand accelerators, may be required to allow the wheelchair user to drive the vehicle.

When it comes to allowing a wheelchair user to travel in the vehicle, it must be adapted in such a way to allow all the above, or it can just accommodate a permanent fixed frame or motorised wheelchair. This can then be transferred into the vehicle using a ramp, winch or hoist and for it to be held safely and securely during the journey.

An able-bodied person may be driving on behalf of the wheelchair user. This may also be the case for adapted motorhomes but not when the wheelchair can simply be stored in the back of one and secured with brackets supplied by a generic aftermarket accessory store. These vehicle adaptations are considered permanent if they are bolted or welded to the bodywork or chassis and/or permanently wired into the vehicle’s electrical system.

*For cases where the wheelchair user drives the vehicle, they would normally have restrictions imposed upon them by the DVLA and these restrictions would be placed in the form of codes on their driver’s licence.

All adaptations must allow the wheelchair user to travel in, get in and out of, and/or drive the vehicle. The wheelchair user is not restricted to sitting in their wheelchair while they are in the vehicle. It is a common misconception that to qualify for zero-VAT status, the vehicle is defined as ‘substantially and permanently adapted’ if a winch, ramp or a hoist is required by the wheelchair user. This is not the case, since a folding wheelchair user may store the wheelchair in a conventional boot but still require adaptations to allow them to drive the vehicle.

In addition, these adaptations should be undertaken by a mobility specialist, not installed by a generic service centre.

If adaptations are used which are readily available from aftermarket accessory stores this would not be considered as a ‘substantially and permanently adapted’ vehicle. Also, fitting vehicle upgrades such as automatic transmission, which may be all that is required for a left-leg amputee despite being defined as a wheelchair user, is also not considered as a ‘substantially and permanently adapted’ vehicle and as such not eligible for zero-VAT status.

* It is often the case that a wheelchair user would be required to undertake a driving assessment with a mobility centre either as a result of becoming a recent wheelchair user requiring the person to inform DVLA of their disabilities or for a first-time driver’s licence application. At the mobility centre an assessment would be given to determine the required adaptations for a wheelchair user to enable them to drive an ‘adapted’ vehicle. These recommendations would be sent to the DVLA and your driver’s licence in section 12 would indicate the required adaptations using code numbers. This is important since it is a legal and necessary requirement to have adaptations to your chosen vehicle to enable you to drive.

Car Dealers

Once you have confirmed you qualify for zero-VAT status, decided which vehicle (car, van or MPV) you would like to purchase and know which adaptations you need then you have the can buy your new car from your chosen dealer.

Don’t confuse the 20% zero-VAT reduction with any discount which the dealer is offering. The zero-VAT discount is an HMRC to allow you, as a wheelchair user, to pay for the adaptations, which are also VAT-free. You should obtain quotes from various car dealers or online car buying websites. Once you have agreed a price for the vehicle you want, including any optional extras, then agree with the dealer that they are willing to provide the vehicle at zero-VAT in accordance with VAT Notice 1002.

This is important, since the car dealers are not required by law to provide a zero-VAT vehicle. This benefit is discretionary and HMRC will not enforce this benefit upon any car dealer, so an agreement of the purchase price at zero-VAT in accordance with VAT Notice 1002 is necessary before any deposit is paid. If a car dealer is not willing to provide you with a new vehicle at zero-VAT, go elsewhere.

Also, most car dealers have a ‘Motability Specialist’ salesperson and a preferred mobility adaptation company they use to provide the adaptations. You are not required to use their ‘default’ company but, if you do have a preferred company, such as Ransome Mobility Solutions, it is highly advisable that this is also agreed before a deposit for the vehicle is paid.

If you are eligible for the higher rate component of Disability Living Allowance (DLA), the enhanced rate of mobility component of Personal Independence Payment (PIP), War Pensioner’s Mobility Supplement or Armed Forces Independent Payment you would also be eligible for 100% refund of the road fund licence including the Premium rate and the first registration fee (see links below). If you are on the PIP standard mobility component you are eligible for a 50% reduction of the road fund licence. You will be required to provide a ‘Certificate of Entitlement’ issued by the Department of Work and Pensions (DWP) to your dealer.

At this point you will be required to complete the customer eligibility declaration form, VAT1615A (see links). However there is considerable onus on the dealer to ensure you, as the zero-VAT customer, are eligible for this benefit or they, and you, are liable to severe penalties and fines imposed by HMRC. So don’t be surprised if the dealer requests additional supporting evidence of your eligibility, such as a copy of your driver’s licence indicating the DVLA restriction codes, and a driving assessment centre report indicating which adaptations are recommended.

It is an HMRC requirement that all adaptations are installed and completed before you collect and drive away the vehicle from the forecourt. Since all of these changes are installed prior to collection, the mobility adaptation company will charge the dealer, not you, for the parts and labour. This means that your final invoice for your zero-VAT vehicle will include the cost of the installation.

Owning the Vehicle

Now that you have obtained your new vehicle at zero-VAT you are not able to purchase another new vehicle within three years from the date the vehicle was made available for use at a zero-VAT rate. This is known as ‘The 3-year rule’ and only allows one adapted vehicle to be purchased either outright or through a finance lease for the personal use of the wheelchair user through this scheme.

Upon the point of purchase, you must also declare you have not purchased a vehicle at zero-VAT within the three-year period. There are some notable exceptions to this rule, such as if the car is stolen or damaged beyond repair or that your disabilities have changed during this period. In these circumstances HMRC need a confirming letter from your insurance provider, police or details from the garage or dealer indicating the vehicle is beyond economic repair. After the three-year period, you would be able to sell the vehicle with or without the adaptations but if the vehicle is sold before this, and without the adaptations, VAT would need to be paid to HMRC.

An additional benefit of purchasing a zero-VAT vehicle is that all repairs and regular maintenance, including parts and labour, are also charged at zero-VAT. If you take the vehicle to a third party or independent garage you will be required to provide the original purchase invoice for the vehicle to confirm it has been supplied at zero-VAT. So, make sure you take care good care of your receipts.

The Motability Scheme

If you are eligible for Motability and a vehicle has been provided to you through this scheme this would not prevent you from purchasing a new vehicle at zero-VAT even though Motability vehicles are also purchased at the zero-VAT rate. This is because the Motability vehicle is not owned by you and you are not allowed to sell the vehicle. It is provided under a form of Personal Contract Hire where you exchange your DLA or PIP enhanced rate of mobility component to hire the vehicle and you hand back the vehicle after the term ends (see links below).

If you do have a vehicle under the Motability scheme you are able to exchange the road fund licence exception by ringing their customer service number, 0300 4564566. You will be required to pay the road fund licence for the Motability vehicle for a whole year. They in turn will inform DVLA that the V5C document for the Motability vehicle is no longer classed as ‘Disabled’, allowing your new vehicle to have the road fund licence exception applied, by providing the ‘Certificate of Entitlement’ issued by the DWP to your dealer.

Allow three weeks for the changeover to occur and confirm with Motability that ‘their’ vehicle according to DVLA is no longer classified as ‘Disabled’ before providing your Certificate of Entitlement to your dealer. You are only entitled to have one vehicle with road fund licence exception. In turn you will now be responsible to ensure your Motability road fund licence is paid each year. Of course, this is only viable if the vehicle you’re purchasing is at a higher licence rate.

HMRC Charities & Disability VAT Team Advice

If you are unsure regarding your eligibility as a zero-VAT status to purchase a new car you can contact the HMRC Charities and Disability VAT team using their helpline on 0300 1231073. This can be a first approach for some verbal advice. Make sure you know all about VAT Notice 1002 (see link below) if you have any specific areas of concern.

In some extreme cases dealers would require a written confirmation of your eligibility from HMRC to purchase a new vehicle at the zero-VAT rate and place the onus on the customer to obtain this confirmation. This can be achieved by submitting an enquiry by e-mail through their website portal (see link below). Once you’ve submitted your enquiry via this portal giving details of your condition, (‘I am a wheelchair user because ….’), the make and model of the vehicle you wish to purchase, and the adaptations to be installed, ask for a reply by e-mail.

You will then receive a confirmation e-mail informing you of a 15-day turnaround to receive a reply. We would advise taking a copy of the original enquiry which is placed within the ‘enquiry details’ field since this is often removed by HMRC in their reply due to customer confidentiality requirements.

Vehicle Adaptations from Ransome Mobility

Ransome Mobility offer a full range of vehicle adaptations to customers in Suffolk, Norfolk, Essex, Cambridgeshire and other destinations across East Anglia. These include wheelchair hoists, easy release handbrakes, scooter hoists, steering wheel balls and twin flip accelerators. Follow the link above for the full list of alterations we can make.

Useful Links:

HMRC VAT Notice 1002

https://www.gov.uk/guidance/vat-relief-on-adapted-motor-vehicles-for-disabled-people-and-charities-notice-1002

HMRC Financial Help If You’re Disabled

https://www.gov.uk/financial-help-disabled/vehicles-and-transport

DVLA How to Apply for Free Disabled Tax

https://www.gov.uk/government/publications/ins216-how-to-apply-for-free-disabled-tax

Motability Leasing Options

https://news.motability.co.uk/scheme-news/how-the-motability-scheme-compares-to-other-leasing-options/

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