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Gifting of Vehicle from Company to Director

Gifting of Vehicle from Company to Director

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Good Morning,

I have a client who has been getting advice from her beautician.

My client has recently had a large CT bill so no doubt was having a grumble while getting her nails done.

The beautician ( who is Limited and VAT registered) was facing quite a large CT bill herself, was advised by her accountant to purchase a vehicle through the company to reduce the liability, then store the vehicle for six months before gifting it to herself with the intention of selling it personally to get some tax free cash. 

I have so many questions regarding this but the main one being, how is this possible?

Replies (17)

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By David Ex
26th Oct 2021 12:24

Why would you sign up to this site to ask about the tax affairs of a third party?

It’s not your problem, for which you should be very grateful, by the way.

If you are an accountant, could you share your tax analysis - as you seem to be interested - and we’ll tell you if we agree with it.

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By Tax Dragon
26th Oct 2021 13:06

Funny how a new poster on 26th October asks basically the same question as came up on 25th October.

Possibly coincidence.
Possibly someone is promoting a 'scheme' (that to me doesn't sound like it works).
Possibly yesterday's poster didn't like yesterday's answers.
Possibly something else.

Possibly it won't be just me gets bored of answering.

What, honestly, is the point of this forum?

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By HUBU
26th Oct 2021 13:07

Sorry. It wasn't me that posted yesterday. I genuinely had a client call me with this "query" this morning.

My initial thought was that the "gift" of the vehicle (at residual value) would be taxable as a benefit in kind on the directors P11d based on the information I had. I don't know if VAT had been reclaimed on the purchase by the company so can't comment on that.

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By Paul Crowley
26th Oct 2021 13:08

The Beautician and her accountant both know
Best ask them
Because nobody here knows, we all keep to the rules

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Replying to Paul Crowley:
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By HUBU
26th Oct 2021 13:16

Paul Crowley wrote:

The Beautician and her accountant both know
Best ask them
Because nobody here knows, we all keep to the rules


This was my point. Sorry if I wasn't clear. My initial thought was no. I haven't found anything that changes my mind.
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Replying to HUBU:
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By Hugo Fair
26th Oct 2021 14:33

Depending on the honesty expressed (by your client's beautician and accountant) in the resulting accounts & tax return, there will either be a case of tax evasion or more than likely the total tax paid will have increased compared to the initial CT forecast.

See https://www.accountingweb.co.uk/any-answers/transfer-company-vehicle-to-... for some likely 'issues'.

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By paul.benny
26th Oct 2021 14:28

A further reason why this is Not A Good Idea is the benefit in kind while the vehicle is "in storage". It would be difficult to argue that the vehicle has not been made available, irrespective of any actual usage.

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By DKB-Sheffield
26th Oct 2021 14:39

Notwithstanding all of the above comments... and assuming the vehicle in question is a not a car - given the significant tax saving (I'd question why a beautician's compaby needs a van, or a JCB)...

Even if this did work,and even if the beautician did manage to 'gift' a vehicle to themselves 'tax free', when they come to sell the said vehicle, by how much will the resale value have reduced?

I don't believe the beautician's accountant has advised this 'per se', or I do not believe your client has communicated what their beautician said correctly. However, I also advice my clients not to take tax advice from beauticians, plumbers or the MDTP! In return, I'd never expect to give advice on nails/ tanning, boilers etc.

Finally, of course there will be IT (i.e. PAYE) implications, of course there'll be VAT implications, and on consideration, there are potential issues with the initial purchase i.e. why does a beautician's company need a vehicle that will attract AIA (van, mobile plant etc.)?

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Replying to DKB-Sheffield:
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By Tax Dragon
26th Oct 2021 14:51

Really CBA to think about this/look it up, but I would guess that a vehicle - JCB or otherwise - bought to put into storage was not

DKB-Sheffield wrote:

a vehicle that will attract AIA...

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Replying to Tax Dragon:
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By Tax Dragon
26th Oct 2021 14:50

(oh, except fraudulently, of course - to go with the whole of the rest of the 'scheme')

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Replying to DKB-Sheffield:
paddle steamer
By DJKL
26th Oct 2021 14:52

You do not give nail advice, that is remiss, whole new revenue stream.

I will try my hand at anything, given I already own a scalpel, needle, thread and tweezers , before I retired from practice I was seriously considering offering cosmetic surgery as an adjunct to my core financial services. Quite handy, really, touch of evasion followed by a new identity and appearance.

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Replying to DJKL:
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By Hugo Fair
26th Oct 2021 15:42

Less potentially painful, but as a wonderful insight into the lunacy of so much (even outside of the world of taxation) ... I've just been reading an article in New Scientist.

Apparently some PhD student has designed some AI software that subverts other AI software.
The new one tells you exactly what shade of 'make-up' to place exactly where on your face so that:
a) the net result is undetectable in person even to your nearest and dearest; but
b) drops the success rate of facial recognition AI software from 98+% to <1%!

I laud the inquisitive nature behind it, but wonder about our practical priorities.

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Replying to DKB-Sheffield:
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By I'msorryIhaven'taclue
26th Oct 2021 15:10

A client told me the other day he'd sold his second hand electric car for quite a bit more than he'd paid for it.

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By ireallyshouldknowthisbut
26th Oct 2021 16:47

Its very easy

HMRC don't check returns any more

So you can put any old carp on and they will 'accept' it as no-one is looking at it.

Or "fraud" as its known.

Of course with MTD, er, it will be, er, just the same.

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Replying to ireallyshouldknowthisbut:
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By Tax Dragon
26th Oct 2021 17:05

No-one needs to look at the ones you submit, because they are correct.

Someone must be looking at someone else's though, or Justin's stream of interesting cases would dry up.

Maybe the targeting has gotten better?

(They've got 20 years to find it anyway. One has to hope that at some point in the next two decades, HMRC will get its [***] together.)

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By CJS88
26th Oct 2021 18:28

I remember schemes like this about 25 years ago. They used to involve gold bars and /or Krugerrand. i.e transferable but not money. I think all these holes in the legislation got blocked not soon afterwards (if they were ever really there anyway).

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By CJS88
26th Oct 2021 18:29

Duplicate

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