Accounts / tax treatment of a vehicle

Accounts / tax treatment of privately financed vehicle

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A company has a commercial vehicle in its books that has been financed by the Directors wife because the company couldnt get finance in its name, the purchase documents all state the Directors wife's name but the log book and insurance and running costs are in the company name, is this a private vehicle whose day to day costs are borne by the company or is it a company vehicle taxed on the Director, the Directors wife appears to have no involvement in the company other than to finance the purchase of a vehicle. 

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DougScott
By Dougscott
21st Jun 2024 14:02

Well, presumably the company will pay the wife back for the loan so create a loan account in the company owed to the wife. I trust that the wife will get a decent rate of interest from the company on her loan in which case CT61s will need to be filed occassionally and if the wife has low or no other earnings can claim the tax deduction back through her SAR. If necessary the wife could do a sale invoice for the vehicle to the company just to evidence it was the company that bought the vehicle.

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Replying to Dougscott:
By Ruddles
21st Jun 2024 14:18

But it wasn't the company that bought the vehicle, was it? So wife would need to sell it to the company. Q - is that permitted? We don't know the form of the 'finance'.

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Replying to Ruddles:
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By CW2012
21st Jun 2024 14:25

Its on HP, in the wife's name.

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Replying to CW2012:
DougScott
By Dougscott
21st Jun 2024 14:30

Now you tell us CW2012! Well then the wife can't sell it to the company can she because I'm sure that the HP company won't let her.

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By JB101
21st Jun 2024 14:07

No x2.

Two words - "pecuniary liability".

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Replying to JB101:
DougScott
By Dougscott
21st Jun 2024 14:20

How is it a pecunairy liability? The wife appears to have bought the commercial vehicle and then sold it to the company. Therefore the company will owe her whatever the sale value is. There is no BIK for the wife.

The director (husband) who presumably uses the commercial vehicle for business and pleasure will of course pay the going rate of BIK.

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Replying to Dougscott:
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By CW2012
21st Jun 2024 14:29

Dare I mention VAT, I haven't got that far yet but I'd bet a deduction for the input vat has been filed. I'm on the fence but could it be treated as a third party providing finance to enable the business to have an asset that it wouldn't have ordinarily been able to purchase?

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Replying to CW2012:
By Ruddles
21st Jun 2024 14:41

CW2012 wrote:
could it be treated as a third party providing finance to enable the business to have an asset that it wouldn't have ordinarily been able to purchase?

Someone will be along shortly to mention bare trusts, but in my view the answer is "no".

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Replying to Ruddles:
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By Paul Crowley
21st Jun 2024 14:43

I beat Justin to it.

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Replying to Dougscott:
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By SXGuy
21st Jun 2024 14:31

Could you highlight the bit that says the wife sold it to the company?

All I see is finance in her name and logbook in the company name.

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Replying to SXGuy:
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By Paul Crowley
21st Jun 2024 14:37

+1
The company is the user, not the owner.

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Replying to SXGuy:
DougScott
By Dougscott
21st Jun 2024 17:42

I suggested this as an option but it appears this is now not an option because the OP has now revealed the vehicle was bought on HP in the wife's name and I wouldn't think an HP company would allow the vehicle to be transferred to a third party!

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Replying to Dougscott:
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By CW2012
21st Jun 2024 17:57

No I don't think the HP company would be keen to transfer the ownership to the company, they couldn't get finance in the first place.

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By Paul Crowley
21st Jun 2024 14:36

Could she be a nominee or a bare trustee?
Either way the director and his company appear to be not credit worthy

If there is a risk then better to look at the reality. She has a vehicle that is being used by the company.

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Replying to Paul Crowley:
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By Tax Dragon
21st Jun 2024 15:45

If so, she should have notified the financing company. Reg 44.

Justin will be able to advise better than I can about the requirements this may put on the OP, and possible sanctions. (But fwiw I think this is theoretical only, as the reality - as you note - is that it's not a bare trust.)

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