A small, VAT-registered, limited company (actively trading in the IT consultancy sector) is considering whether to buy a vehicle that will be made available for rental. The most likely person to rent the vehicle will be the Director's son, who is not connected with the business. The renter would pay a rental fee (including VAT) that would be slightly less than the usual commercial rate for vehicle hire. What's the problem with this proposal?
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There's a benefit in kind for the director, where:
a vehicle is made available for private use to them or a member of their family, without any transfer of property in the vehicle to them.
Sorry, but I'm tired. No offence meant, but although you may be
you are leaving yourself open to being asked whether you know what those rules are.aware of the BIK rules
In addition insurance may scupper, company likely needs cover on a vehicle it owns but rents to others, insurers will charge far more for this than they would re a straightforward policy re own/employee use.