Personal Tax

Personal Tax

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Hi Can anyone advise please. 

If a person with not connection to company buys a commercial vehicle (small van) and charges rent to the company for business use of the vehicle should this be disclosed on an SA?  

This person works part time PAYE for another company and does not usually complete SA.   There is no monthly rental paid for the van but a monthly amount  is transferred to a loan account within the company accounts until payment can be made. 

Thank you in advance for any info.

Replies (13)

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By cparker87
27th Nov 2015 19:06

undertaken for a profit?
Sounds like it. Taxable.

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By Mary Lou
27th Nov 2015 23:44

No. Will probably never be paid the loan to company recorded.

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By Bungo
28th Nov 2015 03:36

Still charging rent
The individual is still charging rent. That they then choose to lend the money back to the company is surely irrelevant.

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By Mary Lou
28th Nov 2015 08:11

Disclosure on SA
The original question still remains. If rent for a commercial vehicle is charged to a company from a private individual is a disclosure required on an SA if the rent is not paid but posted to a loan account with company.

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Replying to I'msorryIhaven'taclue:
By Bungo
28th Nov 2015 10:12

Well I thought

Mary Lou wrote:
The original question still remains. If rent for a commercial vehicle is charged to a company from a private individual is a disclosure required on an SA if the rent is not paid but posted to a loan account with company.

Well I thought that I answered it. You seem to be making a point of the rental income being loaned back to the company, I would say this is irrelevant, it is still income so would of course be taxed.

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By johngroganjga
28th Nov 2015 08:28

Yes of course the income is taxable, net of capital,allowances presumably. What would you think it might not be?

Are you sure the individual and the company are not connected? In a normal hire agreement charges are paid monthly in advance. This arrangement sounds very one-sided, and not at all like the kind of arrangement two parties dealing with each other at arm's length would come to.

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By Mary Lou
28th Nov 2015 09:15

Owing not paid
I was unsure because the income is not paid, owing into a loan account. Therefore is it taxable when paid? The relationship is a family member.

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By johngroganjga
28th Nov 2015 09:27

Well your question is fundamentally misleading as you said there was no connection but now you say the connection is the closest of all connections.

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By Mary Lou
28th Nov 2015 09:32

Relationship
Does that make any difference if there is no business relationship? I just want to know when the rental income should be disclosed on SA. When cash is received or as it accumulates in a loan account in the company.

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Replying to Paul Crowley:
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By qhas
28th Nov 2015 13:08

Rental income

Mary Lou wrote:
Does that make any difference if there is no business relationship? I just want to know when the rental income should be disclosed on SA. When cash is received or as it accumulates in a loan account in the company.

I would say at the point it is earned I.e as it accumulates in the loan account
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By Mary Lou
28th Nov 2015 19:26

Rental income
Thank you.

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By Tosie
29th Nov 2015 16:30

Principal

The company is getting tax relief so there has to be consequences for van owner otherwise we would all do it.

If the company borrows the money from the family member and buys the van there would be no tax issues and the company could claim capital allowances on the van and ofcourse reclaim the vat if co is vat registered.

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By Mary Lou
30th Nov 2015 23:11

Different approach
Thank you for your thoughts. Will consider this approach to solve the tax issue.

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