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Classic Car

Classic car company or personal purchase

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A client is proposing to buy a very expensive classic car that he intends to keep in storage (no use personal use and no trading activity). Our initial advice was to buy this personally and benefit from the CGT exemption assuming the car will increase in value. Client has now questioned whether this should be purchased as an investment by his existing trading company, as he will have to take a loan out to fund the personal purchase. Initial thoughts are no due to potential BIK implications and also loss of exemption due to the possibility that CA's could be claimed and also possible effect on ER?

Readers thoughts would be appreciated

 

 

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By Joe Soap
16th May 2018 15:01

Will you be charging this client enough to cover your time in working through the various possible scenarios to see which is the cheapest method for him to use?
That is my thought.

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By chicken farmer
17th May 2018 09:16

Sounds like a barmy idea to me; he's going to buy a car that he can't afford, will put it in storage and derive no use or benefit from it and hope to sell it for a profit at some unknown point in the future (assuming it hasn't deteriorated whilst in storage).

If he must do this then I agree it should be kept out of the company; it ever does realise a profit then he would have the problem of how to get his hands on the loot. Also if there was ever a chance of selling the company the existence of the car would be a complication; it would have to be extracted somehow before the sale of the shares.

By the way, I don't see how the company could claim capital allowances on the car - it's not being used for the purposes of the company's trade (or used for anything for that matter)..

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By SE
17th May 2018 10:51

Thanks

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By chatman
18th May 2018 10:10

Don't you hate clients who constantly come up with stupid schemes and then expect you to spend your time explaining why they are stupid.

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