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Claim AIA on VAN

through PCP Finance Option

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My client has brought a VAN through his own Limited Company. Cash Value £22K with 2K deposit.

Monthy payment of £220 + VAT which includes interest over over years

Balloon Payment of 6K

Essentially looks like a PCP though its under the limited company (with personal guarantee)

Can my client claim AIA on the VAN ?

 

 

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By bajones
08th Dec 2017 16:38

What's VAN an acronym for?

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Replying to bajones:
By JCresswellTax
08th Dec 2017 16:51

Value added nonsense

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By Portia Nina Levin
08th Dec 2017 16:42

Where's the client brought the VAN from?

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RLI
By lionofludesch
08th Dec 2017 20:00

Jim - what's confusing you here ?

If the VAT's not being charged on the full value of the VAN he hasn't bought the VAN yet, has he ? So there's no AIA.

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By Jim100
08th Dec 2017 21:38

Ok I guess under a PCP my client doesn't take ownership of the Van until the balloon payment is made so it is more similar to an operating lease.

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Replying to Jim100:
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By Accountant A
08th Dec 2017 22:12

Jim100 wrote:

I guess

Surely it's apparent from the contract what the position is? I don't know how precisely terms like PCP are defined and how consistently, but presumably the contract will be clear.

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By Moonbeam
08th Dec 2017 22:45

PCP contracts are very unclear I find.

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Replying to Moonbeam:
RLI
By lionofludesch
08th Dec 2017 23:36

The VAT is the big clue.

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By Jim100
08th Dec 2017 23:45

Just looking at FR102 paragraph 20.5 at one of the criteria for a finance lease

b) the lessee has the option to purchase the asset at a price that is expected to be
sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised;

Normally with a PCP most people give the car/van back after three or four years and get a new car so there is not the "reasonably certain at the inception of the lease the option will exercise".

While PCP may meet some of the aspects of a finance lease, the fact that ownership may not pass with certainty I would say would define a PCP more of a operating lease.

I would assume the concept of all PCP agreements are the same.

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Replying to Jim100:
RLI
By lionofludesch
09th Dec 2017 08:55

Yeah, Jim.

But there's tax law and FRS102.

Not necessarily the same thing.

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