1 van two limited companies

How from an accounting point of view could another company use the same vehicle

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We are looking to start a separate business in a slightly different sector with a different customer base. We have vans leased by the old limited company but would use the same vans for the new limited company. How can the 2 separate companies account for this? Would the 2nd company pay the first company to use the vans?  Thanks 

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By paul.benny
19th Oct 2019 08:33

It's all about the commercial arrangement between the two companies. The first could allow the second to use the vans free of charge. Or charge for it.

Be sure that the lease company are happy that you are lending out the van (hint: they probably won't be) and the that the insurance covers use by the second company (hint: it probably doesn't)

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By Accountant A
19th Oct 2019 11:36

Yup, as pb suggests, the leasing company would be unlikely to permit subleasing.

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RLI
By lionofludesch
19th Oct 2019 11:47

Your problems are likely to be more difficult to overcome in the leasing company and insurance departments. The accounting and tax are relatively straightforward - depending on whether the companies would be registered for VAT or not.

You should probably think carefully about running both activities under one company until you can afford a second van.

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paddle steamer
By DJKL
19th Oct 2019 13:36

The way to get the insurance sorted , certainly if you have a fleet policy, is to have all entities as named as parties to the policy. We did this when we ran a fleet, we had two partnerships and two limited's listed as the policy holders.

We still do this with our property portfolio policy (Albeit just two entities on this), this gets us cheaper insurance as the insurance companies are keener to win the larger block of insurance. (percentage rate per £1 of cover is lower)

A good broker ought to be able to deal with this, re leased vehicles cannot comment, we always owned our vehicles- having said that you may find opening up drivers (we had any driver over 25 for virtually all vehicles) bumps up the cost, we were paying on average £700 p.a. per vehicle (though there were a few flyers in the mix, Nissan Skyline etc, which likely contributed to the slightly expensive average)

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