Kaplan Exam kit Question no. 288 : During the quarter ended 31 march 2020 a trader leased a motor car at a cost of £700(exclusive of VAT) , the motor car is used by the Trader and 75% of the mileage is for private journeys. What is the amount of non-deductible input VAT in respect to the leasing cost of the motor car ?
According to my understanding (£700x20%)x75%= £105 the amount not deductible as VAT but in the exam kit the answer is (£700x20%)x50%= £70 , what am i missing here ? If it was a purchase of motor car instead of lease then all the input VAT would be non-deductible but since its a lease of motor car i apportioned it according to the actual private usage to calculate disallowed amount of input vat.
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VAT exam kit question issue
I understood it now , I just had a look at technical articles on ACCA website which states "Where a leased motor car is available for private use, then 50% of input VAT on leasing costs is non-deductible". This was not mentioned in OT notes so i got confused .
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