PCP Treatment and Company Car

PCP Treatment and Company Car

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Afternoon everyone,

I have a client who has just entered into PCP agreement for a brand new electric car. However looking though various documents provided by the client, the contract seems a bit odd (as there appears to be no finance charges). The details per documents are as follows

Total vehicle price (incl VAT, delivery, reg fee etc) £44,000
Deposit £100

Monthy payments £552.36 for 36 months and final baloon payment £24,115.16 thus equating to £44,000.

The contract states

  1. final payment of £24,115.16 required to settle the guaranteed minimum future value of the vehicle reflects an APR of 0.0%;
  2. the client will need to pay the final balloon payment at the end of the term to own the car;
  3. the client will need to keep the car serviced and in good condition to avoid end of contract charges;

Point 3 seems to indicate risk and rewards are passed onto the client so the vehicle should be capitalised. However, under point 2 the ownership does not pass until baloon payment is made. The small print under Contract Terms seems to be general terms rather than specific to PCP.

I shall appreciate AW's honorable members input in terms of how this should be treated in accounts and whether the tax relief will be available based on monthly instalments (akin to operating lease) or capital allowances can be claimed on this (which is unusual for a PCP)? The accounts will be prepared under FRS 102 s1A.

The other point is the the finance company has arranged a PCP but the agreement is in the name of the company. 
 

Replies (4)

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By Paul Crowley
20th May 2024 15:06

PCP is meant to mean personal.
Is it the person or the company that entered into the agreement?

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By Ishouldhaveknown
20th May 2024 15:31

I agree PCP is meant to mean personal. However vehicle order form as well as other documents such as confirmation of demands and needs refers to client's company being the customer.

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By FactChecker
20th May 2024 17:56

Not really my area ... but forget what "PCP is *meant* to mean", what does the agreement/contract say about who is ultimately liable to pay (whether as principal or as guarantor)?
I'd be surprised if it's the company (as too easy to walk away), but I'm prepared to have my eyes opened!

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By petercooperuk
21st May 2024 20:25

FactChecker wrote:

Not really my area ... but forget what "PCP is *meant* to mean", what does the agreement/contract say about who is ultimately liable to pay (whether as principal or as guarantor)?
I'd be surprised if it's the company (as too easy to walk away), but I'm prepared to have my eyes opened!

It's amazing what a car dealership wanting to make a sale will push through, especially if it's just a single car and not part of a "fleet". I had a company recently buy a car and on the first invoice they put "Mr [Company Name Ltd]" on it (yes, complete with "Ltd" being the last name of the "customer"). Luckily it was all reissued correctly after pointing this out but otherwise appears to have gone through the dealer's usual personal car sales process.

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