Director buys a van personally, can the Company claim CA's?

Director buys a van personally, can the Company...

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Director buys a van personally, the company uses it 100% for business use. Can Capital allowances be claimed on this?How would you treat it through accounts? Help please! Fighting with myself.

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By johngroganjga
14th Jan 2014 10:58

The company can't claim CA's on an asset it has not purchased and does not own.  There is nothing to "treat .. through accounts" as such, except for the charges presumably made by the director to the company for its use of his van.

Of course, if the company were to buy the van from the director all the above would change.

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Euan's picture
By Euan MacLennan
14th Jan 2014 11:08

Yes, but ...

I agree entirely with John, but would add that if the company buys the van from the director, it could only claim WDAs and not the AIA as it would be a purchase from a connected person.

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Replying to Mrbailey:
By dialm4accounts
14th Jan 2014 14:27

No AIA from connected person?

Euan MacLennan wrote:

I agree entirely with John, but would add that if the company buys the van from the director, it could only claim WDAs and not the AIA as it would be a purchase from a connected person.

HMRC say that AIA is not allowed if the asset brought into the business has "previously been used for another purpose", but I hadn't heard before that an asset bought from a connected person is not eligible for AIA.  Do you have a link, please, Euan?

Thanks,

M

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By Steve Kesby
14th Jan 2014 11:17

@ Euan

You've fallen into one of your pet hates (S. 455 on directors' loans). He's not connected just because he's a director! :)

One assumes though that he controls the company, making him connected.

His other options are leasing it to the company and claiming capital allowances personally against the leasing income, or claiming mileage from the company.

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Replying to cjdraper:
Stepurhan
By stepurhan
14th Jan 2014 15:19

Not connected

Steve Kesby wrote:
You've fallen into one of your pet hates (S. 455 on directors' loans). He's not connected just because he's a director! :)
Are you sure that's right? I'm pretty sure being a director makes them a connected person. What it doesn't necessarily make them is a participator, which is a different thing entirely and relevant for s455.
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By Steve Kesby
14th Jan 2014 14:54

@ M

See the first bullet under the anti-avoidance section in CA23087.

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By dialm4accounts
14th Jan 2014 15:01

@Steve

Thanks very much, I'm most grateful.

M

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By Steve Kesby
14th Jan 2014 15:34

@ stepurhan

A connected person in relation to a company is defined (S. 575 CAA 2001) in terms of control. Then there's a definition of control (S. 576) that's defined in terms of shares/voting rights and powers conferred by the articles.

I don't think a director satisfies this definition of connected just by virtue of being a director. They might well satisfy the EIS definition of connected, but that's not relevant to the purpose in hand.

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Stepurhan
By stepurhan
14th Jan 2014 15:37

So just related party then

Thanks for the references. Once more the madness of different legal definitions for similar-sounding things rears its ugly head.

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By Steve Kesby
14th Jan 2014 15:51

Definitions

There are well over two dozen varying definitions for the word "company" in the tax legislation, not to mention numerous different definitions of things like associate, associated person, associated company, etc.

Then there are sections of legislation that use different definitions in different parts of the same legislation. It's little wonder people struggle with it.

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By M.E.Bhayat
16th Jan 2014 16:04

The Director Buys the Van Personally . Can the Company claim CA'

Liam I will raise few questions here. Why the director want to buy van in his personal name ? Is it a cash buy or instalments or leasing purchase? Who pays the operational expenses of the van ?What is the structure of the company:? Is he only director and the share holder ?

My answers to these questions, is that sometime the director buys the vehicle or any other assets in their personal name, because a newly set up company or the existing company doesn't have any credit worthyness. The lenders are not prepared lend the money for purchase of vehicles or any assets in the name of the company and they will demand the director buys in his personal name and use for the benefit of the company. Sometime they allow the company to buy the assets on the personal guarantee of director or directors.As such the assets will not be allowed to incorporate in the company accounts until the outstanding balances on the purchase of assets are paid off by the director.Moreover if the company is wholly paying the operational expenses of the van which is used for the benefit of the company, then the treatment of this purchase in the company accounts can happen two ways.The director can either charge the company equivalent of depreciation charge or capital allowance, or the company auditor or accoutant can ask HMRC to allow the capital allowance on van and explain the reason why the van was purchased in the director  personal name.If he is the only director and share holder the HMRC will consider the request favourably.

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