BIK for director

Director has a car provided

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Hi

Think I know how to do this but just need a bit of reassurance I'm right :)

Director of a company (A) is provided with a leased car with a mix of business / private use (though I guess private use will decrease dramatically once tax / ni cost is advised). She isn't on payroll of this company (no PAYE scheme in place) but on payroll of another company (B) in the same group. Car is paid for by Company A.

Currently no self-assessment in place but I think she should have one so that car can be accounted for as a BIK but do I also need to put a PAYE scheme in place for Company A so that P11d can be completed and car declared? If there is no PAYE scheme how do they declare BIK / Ers NI due?

Also wants to claim VAT on lease back.

Thanks for any help

Replies (16)

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RLI
By lionofludesch
21st Sep 2017 10:24

The car only has to be "available for private use". Whether she actually has any business mileage is irrelevant. She'll have a benefit in kind whether or not she cuts her private mileage down, whether or not she has a salary and whether or not there's an existing PAYE scheme.

Afraid she'll have to pay up. Set up a PAYE scheme and submit form P46(Car) and P11d.

She can claim 50% of the VAT on the lease. It usually says that on the leasing invoices these days.

She doesn't need a self assessment reference because of the benefit, nor because she's a director. There may be other factors about which we're left in the dark that mean she'll need to submit a return.

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Replying to lionofludesch:
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By Portia Nina Levin
21st Sep 2017 10:31

lionofludesch wrote:

...nor because she's a director...

How dare you just wantonly spread such misinformation.

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Replying to Portia Nina Levin:
RLI
By lionofludesch
21st Sep 2017 10:43

[chuckle]

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Replying to lionofludesch:
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By Chris Ash
21st Sep 2017 10:42

Hi Lion

Thanks, I know she doesn't need SA because of directorship :) wasn't sure if she needed one because of car.

I would imagine (knowing the owner of both companies) that none of this has been thought through :)

Probably will not be available for private use once I've explained it to them :)

I'll find out what the car is and break the bad news gently to them. Could be cheaper to change car to a personal lease and take higher salary to cover it.

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Replying to Chris Ash:
RLI
By lionofludesch
21st Sep 2017 10:45

Chris Ash wrote:

Probably will not be available for private use once I've explained it to them :)

Good luck with convincing HMRC of that.

Thousands have failed before you.

Unfortunately, now you're stuck with a lease.

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Replying to lionofludesch:
By SteveHa
21st Sep 2017 11:00

Just saying it's not available is unlikely to cut it. Written terms prohibiting use is very slightly better. Business use only on the insurance policy is much better.

Leaving the car at business premises overnight is also a strong indicator.

But certainly not just saying "Oh, it's not available for private use".

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Replying to SteveHa:
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By Chris Ash
21st Sep 2017 12:23

Hi

Thanks, I'll explain it to them in words of one syallable but they'll still want to risk it.

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Replying to Chris Ash:
RLI
By lionofludesch
21st Sep 2017 12:37

Well, if they do decided to "risk it", don't forget to file an SAR.

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Replying to Chris Ash:
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By Kevin Kavanagh
21st Sep 2017 12:39

Well, if they 'want to risk it' you will need to consider your position.

Edit - beaten to it, great minds etc

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Replying to Chris Ash:
By mrme89
21st Sep 2017 12:38

I am sure that in the event of an enquiry, your client will be fine.

If they get the insurance sorted, and fudge some documents, along with some fictitious mileage logs that reconcile perfectly with the odometer, they will have nothing to worry about.

If you have suspicion that they will use the vehicle privately, but not pay the appropriate tax for such use, you will find that you have a reporting obligation.

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By andy.partridge
21st Sep 2017 12:50

Chris, when you give advice you can offer a balanced view on the risks attached to a grey area. If your intention is to assess the risk only in terms of your client being found out for doing something wrong you become part of the problem.

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Replying to andy.partridge:
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By Chris Ash
21st Sep 2017 13:31

Hi Andy

There's no intention to avoid being found it, just the wish to provide the correct advice and point out the consequences of not taking that advice.

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Replying to Chris Ash:
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By andy.partridge
21st Sep 2017 13:53

May I ask what you consider those consequences to be?

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By Chris Ash
21st Sep 2017 13:36

Some further info.

Director pays all car costs - insurance, fuel etc and also refunds lease cost to the business owner on a personal basis. Owner probably pockets this - no evidence of it going back into company but it may go back into one of his others. (I'm not accountant for his other companies so I don't know)

Do I give them chance to sort it out before filing SAR and disengaging?

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Replying to Chris Ash:
RLI
By lionofludesch
21st Sep 2017 13:47

Chris Ash wrote:

Some further info.

Director pays all car costs - insurance, fuel etc and also refunds lease cost to the business owner on a personal basis. Owner probably pockets this - no evidence of it going back into company but it may go back into one of his others. (I'm not accountant for his other companies so I don't know)

Do I give them chance to sort it out before filing SAR and disengaging?

1. Why would she do all that if there's no private mileage ?

2. She can, however, deduct annual running costs from her BIK.

3. Why didn't you mention this vital information before?

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Replying to lionofludesch:
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By Chris Ash
21st Sep 2017 13:53

Not mentioned before because she's only just told me!

I only get info from them once a quarter to do VAT returns and this lease has just appeared in this quarter's bank info.

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