An employee borrowed the company's van for private use and has agreed to pay for using it. We are VAT-registered. Should VAT be applied when invoicing the employee? And which percentage, please? 

Arthur replies: 

See HMRC’s guidance at www.gov.uk/how-vat-works/what-vat-charged-on. When hiring or loaning goods to someone, VAT should be charged. However, your question was about renting a company asset to an employee on a short-term basis. If you look at: www.gov.uk/guidance/vat-guide-notice-700#section9, section 9.3.1, it states: ‘When goods that belong to your business are put to a private use outside the business, you make a taxable supply. This includes goods that you have produced yourself, as well as goods from your stock and any other business assets. Private use includes: ...use outside the business by anyone else, such as an employee, a relative or a friend. Some common examples of private use are: ...your employees use goods that are assets of your business, at weekends or for holidays. The VAT rate is normally 20%.’