Driven to VAT distraction

In 2001, the law was changed to allow disabled people to buy adapted motor vehicles without paying VAT. This means a saving of 17.5 per cent, but only if you fit the very strict criteria. To qualify for VAT relief, you must either be “a disabled person who normally uses a wheelchair or stretcher to be mobile” or “a disabled person with a degenerative condition, such as multiple sclerosis, who does not need to use a wheelchair all the time, but only when the condition requires it”. The rules also state that “a mobility scooter is not a wheelchair for VAT purposes”.

To qualify for a Motability car, you need to receive either the higher rate mobility component of disability living allowance (HRMC) or war pensioner’s mobility supplement. To receive these benefits, you are deemed to have walking difficulties but not necessarily be reliant on a wheelchair to get about. 

So someone could qualify for HRMC but by HM Revenue and Customs standards not be disabled enough to qualify for VAT relief on their adapted vehicle. This is the case for Jim Rawlings from Norwich, who had a stroke in 1994. Although he doesn’t use a wheelchair, he finds walking difficult and uses a stick.
He says: “I think the qualifying criteria for this exemption is bonkers. I receive HRMC but because I want to keep walking for as long as I can, I’m effectively being penalised by HM Revenue and Customs for keeping active. Surely qualification should be on disability, not how you get about.”

Marianne Tharby is a double-arm amputee, drives a heavily adapted car and also doesn’t meet the criteria.

If the criteria were to change to encompass everyone who receives HRMC, this would not only include ambulant disabled people but also enable people who choose mobility scooters over wheelchairs to be eligible. I know of one lady who had polio, cannot walk at all, and uses a scooter to get about. When she buys a car she has to borrow a wheelchair to avoid the dealer charging her VAT.

Another problem is that the system relies very heavily on dealers making decisions on whether or not somebody fits the criteria. If eligibility were broadened to include everyone on HRMC, dealers could just be shown a qualifying document.

A spokesman for HM Revenue and Customs said: “Formal VAT agreements with our European partners – signed by successive governments – mean that we cannot extend this relief. However, any disabled person, whether a wheelchair-user or not, is eligible for VAT relief on adaptations made to a vehicle to suit their condition.”

However, Mobilise chair Douglas Campbell says: “The criteria for VAT relief does need to be looked at as there are far too many anomalies, but I wouldn’t want the qualifying criteria to be just HRMC as it would exclude some people, including those who become disabled after the age of 65. Mobilise will be bringing this to the attention of the Treasury”.

The current system is also wide open to abuse: this summer, six disabled people were arrested for alleged involvement in a scam involving tax-free sales of luxury cars. No charges have yet been brought.

Clearly VAT relief on vehicles needs a complete overhaul.