I have a new client who set up a limited company last year to start a new business. He took on a lease for a car, in his own name, with the direct debit coming from his personal bank account.
The company was to refund him the payments so that it was effectively providing him with a company car (but not personal fuel) and a P46 was filed (by his previous accountants) with HMRC. The company financed these repayments from a working capital loan.
The company has not yet made any money and cashflow has been very tight. I am due to submit the P11d but there is no money in the company to pay the NI (£800+).
I think it would make sense to unwind the provision of the company car until the business is making money, treating the reimbursements to date as a director's loan (under £10k so not subject to BIK).
I am not sure though how to unwind it with HMRC as they will be expecting a P11d. I can write to them but I am checking if there is another way - such as filing a change on P46 to say the car has been withdrawn on the day it was provided - though that date was 9 April 2014 so I will be very late notifying them.
I have already filed the SA return for the director for 2014-15, showing a benefit in kind so I will have to file an amended SA return to unwind the declared BIK.
Any advise would be welcome.
Thank you.
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Surely
the company was satisfying a directors personal liability rather than providing a car, in which case it would be taxable as salary not a P11D item, or perhaps not if it's made no money though it sounds as if some payment has been made using loan funds.