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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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.
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?
The Beautician and her accountant both know
Best ask them
Because nobody here knows, we all keep to the rules
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'.
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.
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.)?
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
a vehicle that will attract AIA...
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.
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.
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.
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.
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.)
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).