Business only car

Business only car

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My sole trader client and I were discussing incorporating the business, and the question of the company vehicle came up. The client uses a Renault Kangoo that is classed as a car, and is used in the business to transport staff from job to job and carry the associated equipment used. The client uses it as her private mode of transport and I 'add back' for private use. After incoporation the client intends purchasing a car for private use and intends using the Renault solely for business.

As the business is operated from home there is not the opportunity of keeping the 'pool car' at the work premises. If the client insures for business only do you think she will be able to escape company car status?
Jim Sayer

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By Paul Soper
08th Dec 2006 19:03

Two comments
1 - As far as I am aware you can't insure for solely business use - look the VAT case of Upton (t/a Fagomatic) v C&E - the vehicle can only be used on the road if insured for any use that might be made of it, to which business use can be added if otherwise excluded.

2 - As an incorporated company there is nothing to stop your client passing a board minute forbidding private use be made of the vehicle and as long as that is genuine, backed up with adequate records etc, then it should be accepted as not being "available for private use" and its the avaiability that gives rise to the benefit not the use made of it. See the recent Elm Milk v HMRC VAT case in the Court of Appeal for a practical demonstartion of this working - admittedly from a VAT point of view - but that should also help for a BIK perspective - then seek a dispensation on the grounds that it is not available for private use.

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By frauke
08th Dec 2006 15:42

Car & Company
If your client purchases a 2nd car solely for business use, then yes - the other vehicle could be considered a business car ("pool" as you mentioned would be a better description.)

I have seen it allowed before, but additional proof of no private mileage was asked for. This your client can do by keeping a detailed log of each journey - who was driving, where/why and no miles done - so they can PROVE that there is no private mileage. It also would be useful for Insurance purposes should any other staff drive the car - as well knowing who is liable for "speeding fines" etc!

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