Personalised number plates

Personalised number plates

Didn't find your answer?

So a personalised number plate on a company car doesn't give rise to a separate benefit in kind (see EIM24290) and it isn't plant on which capital allowances can be claimed (see CA21250). I think I agree with all that.

According to CA21250, a personalised number plate "gives intangible rights of enduring benefit".  So that would be an intangible asset then?

So my question is can I capitalise the expense in my accounts as an intangible asset, get to the next year-end and carry out an impairment review, conclude that it should be fully impaired and have an allowable intangibles deficit?

I think I can.  Does anyone else have a view they'd like to share?

Replies (16)

Please login or register to join the discussion.

avatar
By Exector
03rd Sep 2012 10:49

Intangible yes - but useful life?

http://www.hmrc.gov.uk/manuals/cirdmanual/CIRD30540.htm

 

See partic 2nd para

Thanks (0)
By George Attazder
03rd Sep 2012 10:59

I agree...

... that it should be amortised over a period of years (not exceeding 20).

However, my suggestion is that an impairment loss (of the full carrying value - cost less amortisation) should be recognised at the first impairment review, as the asset has no "value in use". See CIRD30555.

Thanks (0)
Replying to practiceperson:
avatar
By Exector
03rd Sep 2012 11:36

Yes- seems logical- then the issue becomes one of GAAP so far as tax/HMRC concerned. I think the comment at the end of the first paragraph of your link reference then becomes relevant! Out of the hands of the tax bod to the a/cs bod (if worth referral!)

 

I was replying to George's post, but just seen Euan's. Hadn't considered the business asset & wh & excl question, but if purchased & held by the co and identified as part  of director's overall reward package?

Thanks (0)
Euan's picture
By Euan MacLennan
03rd Sep 2012 11:26

Personal to the employee?

If the car registration is personal to the employee and does not reflect the company name, I think that it is not incurred for business purposes and should not appear in the company's accounts as either a revenue expense or as a capital asset.  If the employee is a director, the cost should be charged to the DLA.

Thanks (1)
By George Attazder
03rd Sep 2012 11:40

@Euan

Would you propose the same treatment for the company car and the £150 per head christmas party?

I think it is perfectly possible for the ownership and the personal enjoyment to vest with different people.

Thanks (0)
avatar
By andrew.hyde
03rd Sep 2012 11:52

Logically...

... if the personal aspect of the plate is a reference to the name of the director then it's not for the purposes of the trade per se but it may be allowable/chargeable as an emolument.  If the nature of the plate is that it advertises the business then it must be for the purposes of the trade. However tax and logic don't always see eye-to-eye.

IMHO the Americans have got it right when they describe these as 'vanity plates'.  Apologies to anyone who has one!

Thanks (1)
Replying to cisono:
avatar
By tonycourt
03rd Sep 2012 12:13

Yes but....

A benefit-in-kind is by its nature a personal benefit to the employee/director rather than the business.  In other words it is a form of remuneration and so usually fully deductible for the business without question. The element of paradox in the tax rules does not concern the deductibility, but the assessabiltiy as a benefit-in-kind. 

TC

Thanks (1)
avatar
By tonycourt
04th Sep 2012 11:35

Paradoxical

You make a good point,  the unbalanced tax treatment for employee and business is paradoxical (not a new concept in tax!). However, Euan also makes a good point , but even this is not free of trouble:

If the plate is personalised in the name of the company it obtains a benefit and, unless their is some event that reduces its future worth, say a change of company name, I cannot see that the value would be much different at the end of year 1 from the time it was purchased. It would, I think, have the same future value to the business and therefore the realisable value wouldn’t come into play, and therefore no write off would be appropriate. But, if there were a change of trading name or something that reduced its future worth then I agree that the asset should be revalued and written down because of this impairment.

By contrast if the plate were personalised to the employee/director the position is, I think, more difficult. The value to the business of the plate would seem to me to be very little from the outset, irrespective of its cost. This means it ought to be written down at the end of the first accounting period as you suggest. And while it doesn't sit comfortably with me I can't see any reason not to follow HMRC's guidance that the plate doesn't give rise to a charge on the employee above the basic car benefit. While my sentiment is with Euan, i.e. the charging of the cost to the DLA, I cannot see any reason why this ought to be done - after all the plate was paid for and remains a company asset unless or until ownership is transferred to employee/director. 

 

 

Thanks (1)
avatar
By Laurence52
07th Sep 2012 12:25

Possible capital gains on disposal

If the number plate is subsequently sold separate from the car, looks like a capital gain arises:

http://www.hmrc.gov.uk/manuals/cgmanual/cg76928.htm

If the car is sold with the plate attached, then this is not a capital gain.

http://www.hmrc.gov.uk/manuals/cgmanual/cg76926.htm

 

Thanks (0)
avatar
By martin.jackson
07th Sep 2012 13:26

Personalized Registration Plates

Not a capital gain as falls within the intangible assets regime for companies (assuming as discussed before, that the right is held by the company and not the individual).

 

Not a taxable benefit in kind for the individual, but clearly is a benefit in that it is available for his personal enjoyment - simply that HMRC accept that it is not taxable on him.

 

For CT the right to use the number is an intangible asset, and my only concern here would be the alleged "impairment" after only one year of ownership.  Intangibles can be amortized for tax in line with accounting standards, ie useful life or otherwise if longer than useful life, by default 20 years.   If it was purchased 12 months ago what evidence of impairment is there?  Registration plates have not significantly decreased in value, the company could simply sell it again and quite possibly realize a profit (an intangible assets credit|) on the deal.

Thanks (2)
avatar
By davidlchapman
07th Sep 2012 13:45

Not on company car

What would be the situation if the company bought a number plate reflecting it's name or trade, but it was placed on the director's private vehicle?

Thanks (0)
By George Attazder
07th Sep 2012 14:35

@Martin

Imagine if you will that my company (I'm the only shareholder and director) have just paid £10K for the registration number B16 GRG.

The fact that someone was trying to charge £10K for it, and I was willing to pay £10K for it, doesn't mean that some other sucker will be prepared to do the same thing.

I therefore need to consider that maybe I just made a bad bargain and should perhaps impair it.  I should write it down to its recoverable amount; being the lower of its value in use and its net realisable value.

In the process it dawns on me, that I'm just a silly sentimental sucker with an inflated ego, and there's no one else in the world that would have paid £10K for it.  My problem is that I don't know its true value; it's unique, it's not a homogenous item that is regularly traded. I can't make a reliable estimate of its market value, so I've got to use its value in use (para 16 FRS 11).

It's got no value in use. The only use to the business that it has is to remunerate me; I've had my jollies; taking it away from me will make me feel sad; but keeping it's not going to keep me happy. The business will have to give me another "fix" sometime soon to keep me happy.

It's true net realisable value can't be reliably estimated; it's value in use is nil. So the recoverable amount is nil. My impairment loss is £10K.

As you say, if I then sell it at a profit, I will get a taxable intangibles credit.

But I'm not going to sell it am I?

No. I'm going to wait until its dark, and everybody's asleep and has forgotten about my worthless little number plate, and then I'm going to transfer that worthless little number plate to the one individual that truly loves it... ;)

Incidentally, please can we remember that we are in the UK, and don't use Webster's dictionary, and write amortisation and amortised (per FRS 10) and personalised, rather than the hideous American alternatives. :)

Thanks (0)
Replying to Linosys:
avatar
By tonycourt
07th Sep 2012 15:15

Zzzzzzz!

George - I always enjoy your posts - often amusing, always informative, helpful, accurate etc (sycophancy done). But as a point of interest "Z" was used in the English language in the past in words like "surprise" and "realise"  - but not now - so I suppoze you're right again!  :-) 

Thanks (0)
By George Attazder
07th Sep 2012 14:01

@David

If there were a benefit, and you might argue that there wasn't, you might be able to claim a deduction under S.365 for it.

Best off arguing that the director hates it and has only allowed it to be put on his vehicle because the company's insisted,so it's not a "benefit or facility of any kind". The S.365 deduction relies on "wholly, exclusively and necessarily".

Thanks (0)
avatar
By martin.jackson
07th Sep 2012 14:51

USA

Have you looked in the Oxford recently?

Thanks (0)
By George Attazder
07th Sep 2012 15:07

Indeed

There's none sadder than I that our great British instution should have suffered such botrytis.

Thanks for confirming my view that the Intangibles regime could apply.  In seriousness, I do accept that the timing of relief will then be circumstance specific.

Thanks (0)