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Company car leases in Director's name

Company car leases in Director's name

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... Instead it insisted that they should be in the director's sole name. There are two contracts one for a car used by an employee (not connected to the director- except for being an employee) and one used by the Director's wife who is also employed by the company. P11Ds etc have always been prepared and the relevant tax and class1A NIC paid. 50% only of VAT was recovered.

Now we have a problem: the invoices will be in the director's name so the company won't be able to recover a proportion of the VAT

if the company reimbursed the director for the lease rental payments, will this be a BIK for him? If so, do we still have a BIK (car benefit) for his wife and employee?

This would seem grossly unfair as the car would be taxed twice.

If we can demonstrate to HMRC that the invoice is only in the director's name because the leasing company refused to put the contracts in company's name will they accept this as a payment by individual on behalf of company? Could this be covered under Section 336 ITEPA 2003 or by a dispensation? P11D would continue to be prepared for wife and employee to declare the car benefit as before and Company would claim corporation tax relief on lease rental payments. I don't know what CO2 g/km the cars are but obviously the deduction will be restricted if this was in excess of 160g/km

I believe the VAT input claim is a lost cause as invoice is in his personal name and not the company.

I should be grateful for any advice from anyone who has come accross this. Apparently all leasing companies are tightening up on car rentals to companies.

Thank you for any feed back.

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By Hansa
24th May 2012 21:11

Will the leasing company not accept a PG?

I can understand that for a start up or a company without much substance the leasing co. may prefer a "personal" contract.  However the finance is already (partially) secured on the asset so I wonder whether it might be worth offering a PG. (which in effect gives them the same security as putting the vehicle(s) in the director's name), and/or an increased deposit?

Failing that, the client should start looking for another finance company.  Even in these hard times there must be finance houses looking for new business.

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