Buying a race/track/rally car through a limited company
Discussion
Would it be driven by a director of the company or any person connected to that director (spouse, child, other family member)?
If so - it becaome a personal benefit in kind and will be subject to PAYE.
You may also find that Corporation Tax reliefs such as running costs and Capital Allowances are severely restricted if not blocked completely.
Here's a relevant tax case about sports "sponsorship" regarding a sporting activity with which the director had a direct connection -
http://www.rossmartin.co.uk/sme-tax-news/430-rugby...
If so - it becaome a personal benefit in kind and will be subject to PAYE.
You may also find that Corporation Tax reliefs such as running costs and Capital Allowances are severely restricted if not blocked completely.
Here's a relevant tax case about sports "sponsorship" regarding a sporting activity with which the director had a direct connection -
http://www.rossmartin.co.uk/sme-tax-news/430-rugby...
Thanks for the reply Eric, I was hoping you'd post!
Yes, sole use of the car would inevitably be down to the directors of the company. I hadn't seen your example but had seen this one;
http://www.hwsmk.co.uk/Docs/HWS_spring_08.pdf
One thing to note would be the age of the car-circa 1990 with a value less than £15k.
Yes, sole use of the car would inevitably be down to the directors of the company. I hadn't seen your example but had seen this one;
http://www.hwsmk.co.uk/Docs/HWS_spring_08.pdf
One thing to note would be the age of the car-circa 1990 with a value less than £15k.
LaurasOtherHalf said:
Thanks for the reply Eric, I was hoping you'd post!
Yes, sole use of the car would inevitably be down to the directors of the company. I hadn't seen your example but had seen this one;
http://www.hwsmk.co.uk/Docs/HWS_spring_08.pdf
One thing to note would be the age of the car-circa 1990 with a value less than £15k.
I don't think age or type of car has any bearing at all.Yes, sole use of the car would inevitably be down to the directors of the company. I hadn't seen your example but had seen this one;
http://www.hwsmk.co.uk/Docs/HWS_spring_08.pdf
One thing to note would be the age of the car-circa 1990 with a value less than £15k.
It's the fact that the "sponsorship" seems to benefit the directors or connected persons as well as outside third parties. In some cases, the "third party" aspect of the so-called sponsorship is missing entirely. Effectively, the director is trying to use company funds to pay for his hobby.
There have been quite a few tax cases over such arrangements and, in most cases, HMRC blocks the allowability of such expenditure as tax deductible business costs.
foxsasha said:
What about a road legal car used for product testing and development by a company that develops and sells performance car parts? Could that be put through the business but not as a company car?
Only if it "beyond use" by the directors or employees and was used 100% exclusively for the business purposes you mention.Eric Mc said:
I don't think age or type of car has any bearing at all.
Thanks for the detailed reply, in short it wouldn't be unreasonable to assume it would be an attempt to fund a hobby via the business. The age of the car I thought might have a baring as I was sure there was some rules regarding the use of a company car that was over 15 years old and under £15k being taxed on its original selling price.I can remember a thread on PH from some years back where people debated running an older car with modern mechanicals and being taxed a small amount by but cannot find the thread now.
Even 1 mile of private usage could kill the claim.
HMRC has a problem with "duality of use" i.e. an asset which is sued some of the time for business and some of the time for non-business.
In some circumstances a "reasonable apportionment" between business and private will be allowed.
In some cases ANY private usage kills any business tax relief.
Their approach isn't always consistent.
With vehicles, a detailed mileage log is often the best way of tracking business v' private - but, as I said, even that may not be of help.
And they may take yet another approach when assessing whether there is a PAYE Benefit in Kind to assess.
Then there's the VAT aspect.
HMRC has a problem with "duality of use" i.e. an asset which is sued some of the time for business and some of the time for non-business.
In some circumstances a "reasonable apportionment" between business and private will be allowed.
In some cases ANY private usage kills any business tax relief.
Their approach isn't always consistent.
With vehicles, a detailed mileage log is often the best way of tracking business v' private - but, as I said, even that may not be of help.
And they may take yet another approach when assessing whether there is a PAYE Benefit in Kind to assess.
Then there's the VAT aspect.
Eric Mc said:
Even 1 mile of private usage could kill the claim.
HMRC has a problem with "duality of use" i.e. an asset which is sued some of the time for business and some of the time for non-business.
In some circumstances a "reasonable apportionment" between business and private will be allowed.
In some cases ANY private usage kills any business tax relief.
Their approach isn't always consistent.
With vehicles, a detailed mileage log is often the best way of tracking business v' private - but, as I said, even that may not be of help.
And they may take yet another approach when assessing whether there is a PAYE Benefit in Kind to assess.
Then there's the VAT aspect.
The car is a test mule. Used for product development and testing. The products are all performance related (brakes/suspension/alignment components/bushes) so the testing consists of all form of driving (road and track) and the testing comprises durability, compliance and performance. It never gets used for any form of commuting or mundane use (shopping, school run etc) and is only ever used being driven for the sake of being driven. We have 15 years history of product development and testing and although we've put lots of development and sponsorship costs through the business previously (including my own cars built using the businesses products and sponsored by the business but running a pro driver rather than myself driving) we have never put the vehicle cost itself through hence my questions.HMRC has a problem with "duality of use" i.e. an asset which is sued some of the time for business and some of the time for non-business.
In some circumstances a "reasonable apportionment" between business and private will be allowed.
In some cases ANY private usage kills any business tax relief.
Their approach isn't always consistent.
With vehicles, a detailed mileage log is often the best way of tracking business v' private - but, as I said, even that may not be of help.
And they may take yet another approach when assessing whether there is a PAYE Benefit in Kind to assess.
Then there's the VAT aspect.
Eric Mc said:
Tell that to the tax man and you will probably be OK.
Back it up with evidence if he asks, even better.
Did you ask your accountant?
What did/he say?
They have no experience of this specific situation and although they've looked into it and ok'd it I'm not convinced I can trust their advice hence me asking for additional input on here. Which I appreciate, thankyou.Back it up with evidence if he asks, even better.
Did you ask your accountant?
What did/he say?
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