New limited company client, who is a start up.
Directors wife bought a expensive van on behalf of company as company had no finance. The company has claimed input vat on the whole value of van ,even though the van is on finance lease. (it passed a VAT inspection as well!!!)
Lease payments are made by directors wife from her personal account as company has no money.
Van is used wholly and exclusively for the limited company.
I was wondering how to treat this arrangement in the company's limited accounts. Directors wife is not shareholder or employee.
Thanks
Replies (5)
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If she bought it "on behalf
If she bought it "on behalf of the company", as you say she did, then it belongs to the company and her interest is as a nominee only.
If you are sure that that is what occurred that is the answer to your question. If you are not sure you will need to ask.
Yes you treat it as of the company's name was on all the documents. The lease payments made by the wife will be a credit to a loan account in her name in the company's books.
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As a finance lease, yes it would. Its two things, a purchase (VAT) and a loan (no VAT) as opposed to an operating lease which is a rental with a monthly VAT charge.
Get your senior to check this over carefully if you are not sure, its easy to slip up on leases.