An impetuous Ltd Co Contractor client has landed herself with an annual Benfit in Kind tax liability of £7,500 after taking out a 4 year business car lease on a CO2 monster before consulting me. She is hoping I can persuade HMRC that the vehicle will only be used for business purposes because a) she will keep her private car that she had intended to sell, and b) she asked me to draw up an Employment Contract which contains the magic clause "no personal use of car allowed". Sadly, yesterday I came across the Minimum Wage exemption problem: my client's current remuneration strategy is NIC threshold level salary, and dividends thereafter. In putting in place the Emplyment Contract I understand she will have to pay herself a salary at the Minimum Wage level, approximately £8k more than now.
Is there a way around this? And if we are succesfull in proving exclusive business useage, do we automatically become entitled to 100% input VAT claims on the lease payments? Many thanks