Hi
A client is considering a PCP agreement to buy a car for his employee through his Limited Company.
Although I know about such agreement as I have one myself (personally), I'm wondering what the correct treatment is in the accounts.
I initially thought the monthly payments would be included in the P&L acct (and 50% VAT reclaimed), then when the car is returned, the payments cease.
However, I then started searching in a few forums just to see what others thought and there seems to be some who think it should be treated as a HP agreement.
There's also the added implication of the director using a private vehicle in p/ex which seems straightforward accounting-wise if it is treated as HP, but if it is as a lease, then how do I bring in his private vehicle and credit his loan account (the only way I could think of was to debit the balance sheet and w/o over the term of the lease?).
I wondered whether anyone could point me in the right direction.
Many thanks
Chicka
Replies (4)
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Just wondered
As I believe PCP stands for personal contract purchase, is business use permitted? It's obviously important to establish for insurance purposes - and probably VAT too.
Not accounting but ...
http://www.telegraph.co.uk/motoring/news/10683988/Is-PCP-finance-a-good-...
This looks comprehensive
https://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Docume...