Van in Directors spouses name

Van in Directors spouses name

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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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By johngroganjga
29th Apr 2015 13:25

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.

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By Phil653
29th Apr 2015 13:33

She has defiantly bought it

She has defiantly bought it on behalf of the company, and beneficial owner is the company.

so would it be a simple case of

Dr Assets - whole amount of van

Cr Creditors- HP company split between long term and short term creditors.

Not sure how to treat the lease payments made so far by the directors wife, which came out from the directors wife's bank account.
 

e.g.

Dr HP payments for lease (after necessary adjustments etc)

Cr Wife as a creditor

 

Would there be a related party disclosure?

 

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By johngroganjga
29th Apr 2015 13:33

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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By Phil653
29th Apr 2015 13:50

Thanks John - helpful as ever.

As it was a finance lease, surely the Input tax shouldn't have been claimed on the total value of the asset?

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By ireallyshouldknowthisbut
29th Apr 2015 14:13

.

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.

 

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