Withdrawing company car

Withdrawing company car

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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I can write to them but I am checking if there is another way - such as filing a change on P46 to say the car has been withdrawn on the day it was provided - though that date was 9 April 2014 so I will be very late notifying them.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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By Paul D Utherone
05th Jul 2015 22:46

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.

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By Clare Chapman
06th Jul 2015 08:55

The intention was to provide a company car as the director does a lot of business mileage.  But the bank account was not set up at the time the lease was taken out so the director took the lease out on behalf of the company.

Based on your comment above, I would still need to unwind the P46/BIK situation.  Is there an easy way to do this?

 

 

 

 

 

 

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