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Sole traders and cars

A sole-trader client is looking to purchase a new car but has been refused credit.  She has asked whether the car could be bought in her mother's name and the business use still be treated as an allowable expense.  Her mother has no connection with the business.

My gut instinct is no, but then I wonder if it would make a difference if she went down the approved mileage rather than capital allowance route.  But then I wonder if I'm over-thinking it!

A second opinion would be much appreciated.

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Sell on?
Pehaps she could simply buy it from her mother, with relevant invoice/receipt? Maybe the purchase could be via a loan arrangement that mirrored the actual HP agreement?

Even so, it's worth lookng at the mileage route also, especially if there migh be substantial private use. You need to crunch the numbers.

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That's an interesting idea - she buys it from her mother on the same terms.  Thanks.

I agree I need to look at the numbers to see which is the most efficient route.  I can get into that when she has actually decided what to do with the car. 

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I thought the approved mileage allowance payment (AMAP) method was meant to be a method for businesses to use when reimbursing their employees for business miles incurred in the employee's personal vehicle.

 

I don't think the AMAP method can be used by sole traders to reimburse themselves unless their turnover is less than the VAT threshold.

 

I welcome corrections to the above.....

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@GR
Good point, they have to be below the VAT threshold when the vehicle is purchased (regardless whether they're actually registered or not).

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Turnover is below the VAT threshold.  Sorry, didn't mean to dripfeed information.

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Sme query but

Hi

I had the same query re: a client and wondered about re-creating the same loan repayment terms to the mum, my only query was re: the interest.  Could the client claim this as a deduction?

Thanks

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I don't see why not BMary
As long as the inter-family loan is incurring interest at the same rate (which it will if it mirrors the HP terms)

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