More Cars than you can shake a stick at

What's your best method?

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Mr and Mrs Bloggs, a partnership in business for many years, had 1 van and 2 cars at the start of the year. Subbies frequently drove the van apparently. Halfway through the year they took on a lease for 2 more cars. I'm told occasionally a subcontractor will use one of these.

I know they have adult children and assume that perhaps the older 2 cars were given to family members on the basis that good old HMRC would subsidise it all.

I haven't had the "I put it to you.." conversation yet, but am likely to need to shortly as these accounts are very late indeed. Croner's have advised me to say where is your log of business miles. I feel I will get the response that there is no such log. I then need to write them a letter, but will have to work out what to say.

4 cars and 2 people is a red light. I cannot see the necessity for 4 cars or where they could be parked given the small amount of hard standing. I'm tempted to say the 2 new cars need to be treated as non business and taken out of any business calculations unless they can prove otherwise with mileage logs showing date, customer, reason for visit and round trip miles as required by HMRC.

What's your advice on how to deal with Mr Bloggs? (If he says he's going elsewhere after this I really won't mind, or I'll have asked him to go before that).

Replies (4)

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By MissAccounting
21st Jun 2019 14:01

Might as well just bin them off , theyve clearly taken advice down the pub and whatever you say is going to end up with them leaving, either now or shortly, so save yourself the hassle and get rid now.

Thanks (2)
By Paul D Utherone
21st Jun 2019 15:12

What sort of business and what sort of cars.

You certainly need some logs, and detail of who uses the car and when, but presuming that they're in the building trade (and depending on size & type of business) I could imagine a scenario where they said "we kept the old cars for visiting sites and the new ones are to present an image when bidding to developers".

Surely it's a fairly easy conversation to expand on previous years questions as to business / private use to establish if all the cars are still used in the business, by whom, and to establish b/u : p/u etc..

Thanks (2)
By ireallyshouldknowthisbut
21st Jun 2019 16:13

Having asked for private/business use etc, if told they are all 100% business, ask what they use for private use.

Ie do they have more vehicles?

Then you can do a "I think HMRC would see it as............" and ask them what evidence they would have to disprove HMRC's assertions if we have a tax investigation tomorrow. Assure them that HMRC are hot on this at the moment etc, and you wouldn't want them to get into the cack.

Thanks (3)
By Moonbeam
24th Jun 2019 11:11

Thank you for all your comments. This is a new client and due to no diligence whatsoever from previous accountant this is one of many issues I'm having to deal with.
Believe it or not, I've never had a client like this before and suspected I would have the problems but thought it would be a training exercise for me - which it definitely will be.
What I've learnt is to just say no to any other similar prospect in future!

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