VATGPB10250 - Government departments and health authorities: Contracted Out Services (COS) Headings: COS Heading 26 - Hire of vehicles, including repair and maintenance

The full heading reads: Hire, which includes an obligation on the part of the hirer to repair and maintain, of vehicles where hire is for a period in excess of 30 consecutive days.

This heading was changed by publication of a new Treasury Direction on 30 October 2020. However, eligible bodies may apply the new heading from 1 September 2020, if they wish.

This heading allows recovery where a government department or NHS body enters into a contract for the supply of a vehicle/vehicles and the repair and maintenance of these vehicles by the supplier is specified in the contract.

The heading applies to long-term contracts. In practice, contracts for less than 30 days rarely include a maintenance element, because a car would simply be replaced if there was a problem, so leases of 30 days or less are excluded from the heading.

Includes

• Contracts for the hire of pool cars, company cars or other vehicles where the contract includes repair and maintenance by the supplier

Excludes

• Hire of vehicles alone where the contract does not include repair and maintenance, however the VAT on the separate supply of repair and maintenance will be recoverable under heading 37

Additional information

• Where you have a contract which includes both the hire of vehicles without repair and maintenance and hire with repair and maintenance, you can only recover the VAT in relation to the element of the hire which includes repairs and maintenance. This is an exception to the general rule, where normally a single supply of hired vehicles would be recoverable. Here, you must carve out the recoverable and non-recoverable elements.