The British Vehicle Rental and Leasing Association (BVRLA) is asking for the current VAT recovery rate of 50 per cent on leased fleets to be increased, and is accusing HM Revenue and Customs (HMRC) of ignoring the issue.

The organisation feels that a recovery rate of around 70 per cent would more accurately reflect real business mileage, and have undertaken research that estimates the resulting overpayment as amounting to GBP300 million each year. The figures from BVRLA used data from over 120,000 drivers covering nearly 2.5 billion miles, and show that leased fleet vehicles have been 70 per cent used for business for at least three years.

In a letter to HMRC, John Lewis, BVRLA’s chief executive, said HMRC has chosen to ignore the very robust data we provided in favour of a much smaller sample of 418 drivers based on an anecdotal survey conducted by the Department for Transport, which conveniently backs its own position.

A spokesman for HMRC commented The current recovery rate of 50 per cent broadly reflects the business use of leased vehicles across all sectors and therefore continued use of this rate will not have a significant impact on the amount of VAT that UK taxpayers are required to pay. We will continue to work with the BVRLA and our joint findings will be used to inform future derogation renewals.