correct way to treat

asset with private use

Didn't find your answer?

have a limited company client we have taken on

client had bought a van, but rather than having a BIK, the old accountant advised them to pay the company for the private element of the van - they paid 25% of the cost, but nohting then for private fuel!

however they had included the full cost of the asset in the accounts (claiming capital allowances on it) and the clients contribution as a sale, with CT being paid on it

this seems wrong to me, can anyone confirm if it is right or how it should be dealt with? the van was bought in the prevosu year so we have time amend the accounts and tax return if needed

Replies (3)

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By Ruddles
14th Nov 2018 14:17

Dear oh dear, there are some useless accountants out there.

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By Duggimon
14th Nov 2018 15:22

I don't want to be too hard on you because you do obviously know this is rubbish, but you didn't really need to ask if that was correct, did you?

I would suggest double checking who actually owns the van and then going from there, ignoring everything done by the previous accountant.

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JCACE
By jcace
14th Nov 2018 16:58

Assuming that the van is owned by the limited company, you need to first of all ascertain whether it is available for private use by a director or employee etc etc https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim22701

For deductions for private use, see https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim22840

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