does that particular car registration show up on their insurance policy, to confirm they are insuring it as a pool car, or does it just fall under the scope of the main policy where trade plates can be used.
As Accountaholic mentioned, you shouldn't be thinking about the trade plates. The specific rules will almost certainly not include whatever the pool car will be used for, so it will have to be insured separately. That may be with the same insurer as the business insurance which includes the trade plates, of course, but it will be a motor insurance policy or section.
As for whether or not it will show up on the policy will depend on the insurer. If the client has a fleet policy for several vehicles (of their own rather than customers' vehicles, which seems unlikely from the wording of your question), it is unlikely that there will be any references to specific vehicles (as Yossarian has said); but if it's the client's only vehicle that is being insured, the policy will probably be for that one vehicle (rather than a fleet) and will specify the registration number.
Thank you both.
The trouble with the Coca-Cola case (imho) is that it didn't clarify things at all, unless you happen to own one of the three vehicles that they looked at. For all other such multi-use vans, nobody is any the wiser!
I have noted the outcome, but would someone help me with my understanding?
We have agreed that this is a BIK question, and VAT classification has no relevance here. So why is this extract from EIM23110 not what we should be going by:
"In deciding whether or not a particular vehicle counts as a car for car benefits purposes, the starting point is the definition in Section 115(1) Income Tax (Earnings and Pensions) Act 2003 (ITEPA). This works by exception: every mechanically propelled road vehicle is a “car” unless it is:
(i) a goods vehicle (a vehicle of a construction primarily suited for the conveyance of goods or burden of any description)"?
This is apparently a little van that was built as a little van for the purposes of carrying goods. EIM 23110 goes on to say that,
"Actual use of a particular vehicle is irrelevant: the statutory test is a test of construction, not use."
So is there something somewhere that I have missed that defines "conversion", which makes the purpose of construction suddenly irrelevant?
I can't see why this van is not still a van for BIK purposes.
In January 2021, I was told by a VAT officer that the 'cut-off date' for this sort of change was the first week of the second month of a VAT quarter. But when I next came to change a client's dates (from Feb-Apr to March, June etc.), I submitted the request before the end of February (the first month, which sounds like it's in line with your situation). Speaking to an officer a little later, I was told that the change had taken place and they were expecting a two-month return for February and March. But when we came to actually make the submission, the system still wanted a three-month return (Feb-Apr), and the switch was only made for the period to 30 June!
And in my experience, they will do a four-month period rather than a one-month period, so that'll be Sep to Dec for you here.
What I am struggling with is understanding how you find and procure these vehicles at a price such that you can sell them at a profit, there is maybe some value uplift in repairing/restoring but am struggling to see why you have an edge to somehow acquire and then merely resell for profit?
Why would he want to tell you his secrets?
But there are plenty of second-hand car dealers out there who seem to be able to buy cheap and sell high.... and classic cars tend to have much more room for manoeuvre as there is less of a market to look at to know what the price "should be".
Why do you want to put this "business" through your company, rather than just having a hobby?
There is no CGT on cars, and what appears to be your main issue about BIKs is not an issue!
If you're basing it on VIT13400, then it depends on the subbies and whether they are working solely for the client:
"A business might pay for subsistence, road fuel or other motoring costs incurred by self-employed people working for it. If it does the tax incurred is input tax of the business provided:
....
the individual incurs the expenditure only in respect of their “employment” by the business. Where someone like a self employed salesman represents a number of firms at the same time, their subsistence does not relate to any one “employer” and none of those firms can treat the VAT incurred as input tax;"
And if the subbies are only working for the one client, then the whole CIS/"employment" situation should be considered, as others have mentioned.
If you are talking about the approved mileage rates payable to an employee for business mileage in their own car (up to 45p per mile), then where does VAT come into it?
My answers
As Accountaholic mentioned, you shouldn't be thinking about the trade plates. The specific rules will almost certainly not include whatever the pool car will be used for, so it will have to be insured separately. That may be with the same insurer as the business insurance which includes the trade plates, of course, but it will be a motor insurance policy or section.
As for whether or not it will show up on the policy will depend on the insurer. If the client has a fleet policy for several vehicles (of their own rather than customers' vehicles, which seems unlikely from the wording of your question), it is unlikely that there will be any references to specific vehicles (as Yossarian has said); but if it's the client's only vehicle that is being insured, the policy will probably be for that one vehicle (rather than a fleet) and will specify the registration number.
I hope that helps!
Thank you both.
The trouble with the Coca-Cola case (imho) is that it didn't clarify things at all, unless you happen to own one of the three vehicles that they looked at. For all other such multi-use vans, nobody is any the wiser!
I have noted the outcome, but would someone help me with my understanding?
We have agreed that this is a BIK question, and VAT classification has no relevance here. So why is this extract from EIM23110 not what we should be going by:
"In deciding whether or not a particular vehicle counts as a car for car benefits purposes, the starting point is the definition in Section 115(1) Income Tax (Earnings and Pensions) Act 2003 (ITEPA). This works by exception: every mechanically propelled road vehicle is a “car” unless it is:
(i) a goods vehicle (a vehicle of a construction primarily suited for the conveyance of goods or burden of any description)"?
This is apparently a little van that was built as a little van for the purposes of carrying goods. EIM 23110 goes on to say that,
"Actual use of a particular vehicle is irrelevant: the statutory test is a test of construction, not use."
So is there something somewhere that I have missed that defines "conversion", which makes the purpose of construction suddenly irrelevant?
I can't see why this van is not still a van for BIK purposes.
In January 2021, I was told by a VAT officer that the 'cut-off date' for this sort of change was the first week of the second month of a VAT quarter. But when I next came to change a client's dates (from Feb-Apr to March, June etc.), I submitted the request before the end of February (the first month, which sounds like it's in line with your situation). Speaking to an officer a little later, I was told that the change had taken place and they were expecting a two-month return for February and March. But when we came to actually make the submission, the system still wanted a three-month return (Feb-Apr), and the switch was only made for the period to 30 June!
And in my experience, they will do a four-month period rather than a one-month period, so that'll be Sep to Dec for you here.
[quote=DJKL]
What I am struggling with is understanding how you find and procure these vehicles at a price such that you can sell them at a profit, there is maybe some value uplift in repairing/restoring but am struggling to see why you have an edge to somehow acquire and then merely resell for profit?
Why would he want to tell you his secrets?
But there are plenty of second-hand car dealers out there who seem to be able to buy cheap and sell high.... and classic cars tend to have much more room for manoeuvre as there is less of a market to look at to know what the price "should be".
Why do you want to put this "business" through your company, rather than just having a hobby?
There is no CGT on cars, and what appears to be your main issue about BIKs is not an issue!
If you're basing it on VIT13400, then it depends on the subbies and whether they are working solely for the client:
"A business might pay for subsistence, road fuel or other motoring costs incurred by self-employed people working for it. If it does the tax incurred is input tax of the business provided:
....
the individual incurs the expenditure only in respect of their “employment” by the business. Where someone like a self employed salesman represents a number of firms at the same time, their subsistence does not relate to any one “employer” and none of those firms can treat the VAT incurred as input tax;"
And if the subbies are only working for the one client, then the whole CIS/"employment" situation should be considered, as others have mentioned.
If you are talking about the approved mileage rates payable to an employee for business mileage in their own car (up to 45p per mile), then where does VAT come into it?
The type of expensive car may make a difference - the company would get a 100% FYA for a Tesla, but not for, say, a Maserati Quattroporte.
Ah, you can edit, but not delete, it seems...