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Treatment of a recharge of car leasing costs from one company to another

Treatment of a recharge of car leasing costs...

All transactions/contracts were initially conducted through company A. Company B was then set up as a separate venture with the two existing directors from company A and an additional two external directors/shareholders in company B.

A vehicle currently leased/paid by company A is now being used to one of the new directors of company B with a monthly invoice being raised to re-charge the months rental from company A to company B.

Would it make sense to treat this as a leasing cost in company B or as part of other inter-company/management re-charges.


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By AD2001
29th Sep 2011 22:10

It's purely a disclosure point but I'd show it as a separate leasing recharge.

Are they suffering any disallowance for tax on the lease charges? (ie, retail price >£12k if leased pre 1/4/09 or CO2 >160g/km if leased post 1/4/09). If they are then you'll need to include separately to calculate and disclose the disallowance.

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29th Sep 2011 22:22


That was my first instinct too, but then I started to over-think it because company A isn't itself making a supply of the lease of the car, but as you say it's purely disclosure.

Thanks for the reminder on the tax addback - I haven't got all the details yet but I'll make note for year end. The VAT rules, as far as I know are still a 50% restriction.



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By neileg
30th Sep 2011 10:32

Company A is making the supply of the lease of the car abeit on an informal sublease. Company B will suffer the 50% VAT restriction but not company A because there is no private use in campany A associated with the lease.

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