Company car repossession imminent?
Discussion
OwenC said:
CraigyMc said:
OwenC said:
it would obviously be hard finding another vehicle (especially of this calibre)as a new company
You've said it yourself. There are reasons why it would be hard to do this as a new company, and yet that's what you want the existing lender to sign up to.C
The finance company only have something to lose if they can't get the money out of him.
C
Personally, I'd let it go and get a cheap £3k mondeo to get you through your first 6 months. Landing yourself with vanity new car debts on a business start up seems a bit mad to me.
Keep the cash in the bank, build up some capital and buy something shiny in a years time when established would be what I'd do.
Startups can't get credit on cars or much else, just one if the challenged of starting a new business. Whatsmore, do you know what they paid for it? They might have got a big discount so won't make much of a loss anyway.
Keep the cash in the bank, build up some capital and buy something shiny in a years time when established would be what I'd do.
Startups can't get credit on cars or much else, just one if the challenged of starting a new business. Whatsmore, do you know what they paid for it? They might have got a big discount so won't make much of a loss anyway.
What actual kind of car is this - sensible economy car like Focus / Mondeo diesel or a "toy" - Merc, Saab, BMW, Porsche, Jaguar, Lexus, etc ?
New company needs to be sensible with least overheads possible and the toys can wait until sucessful. A secondhand diesel Focus or similar will do everything that a high end lease car will do and I bet any accountant would recommend that route for the time being.
I also suspect type of car MIGHT affect lease companies actions. A sensible car could be seen as a fair risk to transfer to a new company but a "toy" is an indulgence so high risk and they'd want it back to "cut their losses". Just a theory though.
Paul H
New company needs to be sensible with least overheads possible and the toys can wait until sucessful. A secondhand diesel Focus or similar will do everything that a high end lease car will do and I bet any accountant would recommend that route for the time being.
I also suspect type of car MIGHT affect lease companies actions. A sensible car could be seen as a fair risk to transfer to a new company but a "toy" is an indulgence so high risk and they'd want it back to "cut their losses". Just a theory though.
Paul H
OwenC said:
the car at present has 5k miles on the clock and has therefore been hit by approx 25% depreciation looking at values, even at that price its not going to sell quickly, at auction it will probably sell for -30% of the new price.
Which is quite likely more than they paid the manufacturer for it.Quick question. Your brother has run his company into the ground, you've started up a new company using some of the old contracts but still given your brother a job?
Roo said:
OwenC said:
the car at present has 5k miles on the clock and has therefore been hit by approx 25% depreciation looking at values, even at that price its not going to sell quickly, at auction it will probably sell for -30% of the new price.
Which is quite likely more than they paid the manufacturer for it.Quick question. Your brother has run his company into the ground, you've started up a new company using some of the old contracts but still given your brother a job?
Why not get a "current shape" car - but one that is a few/several years old as opposed to 6 months old. Then add an "ageless" number plate for a few hundred quid and your customers will perceive it as a nearly new car (therefore your firm is successful, so why not use your services?) and not one that cost a fraction of the new cost and is older & cheaper than they think (your business's turnover is debatable, so why should they deal with you?) 
.
You can get uprated 'visible' parts (eg clear indicators, later model's external trim, recent badges or whatever changes have happened to the 'look' of the car) from a scrapyard, to enhance the impression of a late vehicle, if you wish.
The first paragraph of this post is actually lifted from Buying Cars mag circa 1992, and was phrased better in the original version - but hopefully you get my drift.
It would be worth taking financial advice about financing company vehicles, but you need transport at minimal cost to the company for now until you get fully established in the Bank's eyes...
. You can get uprated 'visible' parts (eg clear indicators, later model's external trim, recent badges or whatever changes have happened to the 'look' of the car) from a scrapyard, to enhance the impression of a late vehicle, if you wish.
The first paragraph of this post is actually lifted from Buying Cars mag circa 1992, and was phrased better in the original version - but hopefully you get my drift.
It would be worth taking financial advice about financing company vehicles, but you need transport at minimal cost to the company for now until you get fully established in the Bank's eyes...
paoloh said:
If his only creditor is HMRC, why did he fold the company?
There must have been a better way out!!!!????
I wondered that. I hope the OP is a person of integrity, was the company folded with many many unpaid creditors????. If so then the fact all you care about is keeping your vehicle then you disgust me.There must have been a better way out!!!!????
As someone who has written decent amounts of bad debt of over the years i hope i am wrong...But from the comment about your brother funding his lifestyle as a number one priority (no doubt at unpaid creditors expense!!)it doesn't sound like it.
If you are setting up new and your customers know this then turning up in a flash new car can be counter productive, people are usually happy to see new tools so a new van, a new laptop, brand new kit, but a shiny new personal car looks like you are already increasing overheads. A reliable older Mondeo, or a tidy old ageless plated German barge is less likely to put people on edge.
Edited to add, In your situation get a cheap run around, I'd be pissed off if a guy I knew who worked for a company that went bump owing money drove up in a Ford RS possibly pissed off enough to ignore any quote of theirs.
Edited to add, In your situation get a cheap run around, I'd be pissed off if a guy I knew who worked for a company that went bump owing money drove up in a Ford RS possibly pissed off enough to ignore any quote of theirs.
Edited by Engineer1 on Friday 24th December 10:56
A Focus RS is not an essential business tool but an employee / directors perk / toy.
If you can afford then it's your choice but very few people would recommend for the situation you have outlined aready.
Most new businesses fail within a year or so. That means the lower the overheads during the first year the more chance it has of succeeding.
Better to get rid of the RS now and buy a good used car for cash than having to lay out nearly £400 a month even if no work / income comming in.
The business can sell a car it owns at a later date so even a £3000 used Mondeo will then add money back whereas a leased car is dead money and in fact a liability.
Nobody can say for definate that their business will succeed. Even well established and high paying contracts can dissappear, "staff" can leave / get injured so not able to work, "acts of God", clients go bankrupt owning you money, clients have cashflow so can't pay you until next quarter / half year etc meaning can you survive for a few months with no income ?
Paul H
If you can afford then it's your choice but very few people would recommend for the situation you have outlined aready.
Most new businesses fail within a year or so. That means the lower the overheads during the first year the more chance it has of succeeding.
Better to get rid of the RS now and buy a good used car for cash than having to lay out nearly £400 a month even if no work / income comming in.
The business can sell a car it owns at a later date so even a £3000 used Mondeo will then add money back whereas a leased car is dead money and in fact a liability.
Nobody can say for definate that their business will succeed. Even well established and high paying contracts can dissappear, "staff" can leave / get injured so not able to work, "acts of God", clients go bankrupt owning you money, clients have cashflow so can't pay you until next quarter / half year etc meaning can you survive for a few months with no income ?
Paul H
OwenC said:
Do I trust my brother? No I dont particularly but he holds key skills and contacts.
Your brother is basically "the business" (skills and contacts). What happens if he wants the high life again and decides that he can earn more working by himself so gets 100% of the income instead of 50% ? What happens if he is "poached" by someone else with temptation for higher earning and then takes his skills / contacts with him ?
Paul H
Edited by Compo_Simmonite on Friday 24th December 11:10
Have you worked out the economics of having a Focus RS as a company BIK?
I looked at the Focus RS and the sums didn't stack up. Under the new rules the amount of lease payment you can claim is related to the Co2 emissions, the Co2 emissions on a Focus RS are in a high bracket and the company can only claim back something like 25% to 30% of the lease payment plus maximum 50% of the VAT element.
On top of this you will pay Company Car tax based on the Co2 emission also, which from my (higher rate tax bracket calculations) came in at around 350 a month. so the company only gains about 120 write off and you have to pay the full value of the lease in company car tax.
When my accountant ran the numbers the best deal we could come up with was a straight £2000 deposit plus £475 a month on hire purchase, then claim 40p a mile for around £6500 tax free mileage allowance to cover the repayments, i would have saved 2-3K overall.
That said the fuel consumption on the RS doesn't make it a very attractive company car, I now run a C200 Cdi Diesel which costs less than £350 a month and only costs around 10p a mile in diesel leaving 30p a mile to cover the other costs.
I would listen to some of the advice you have been given, a Focus RS is a nice perk but putting it through the company will probably cost you 3K a year more than if you run it privately and claim the mileage, when i started my company i bought a second hand BMW 328Ci for 4K cash and was effectively running the car for free because I could claim 6.5K a year tax free mileage.
It might seem a trivial amount, but this is what got your brother in trouble - handing the tax man 3K a year for the priveldge of renting a Focus RS is not good business management however much you like the car.
I looked at the Focus RS and the sums didn't stack up. Under the new rules the amount of lease payment you can claim is related to the Co2 emissions, the Co2 emissions on a Focus RS are in a high bracket and the company can only claim back something like 25% to 30% of the lease payment plus maximum 50% of the VAT element.
On top of this you will pay Company Car tax based on the Co2 emission also, which from my (higher rate tax bracket calculations) came in at around 350 a month. so the company only gains about 120 write off and you have to pay the full value of the lease in company car tax.
When my accountant ran the numbers the best deal we could come up with was a straight £2000 deposit plus £475 a month on hire purchase, then claim 40p a mile for around £6500 tax free mileage allowance to cover the repayments, i would have saved 2-3K overall.
That said the fuel consumption on the RS doesn't make it a very attractive company car, I now run a C200 Cdi Diesel which costs less than £350 a month and only costs around 10p a mile in diesel leaving 30p a mile to cover the other costs.
I would listen to some of the advice you have been given, a Focus RS is a nice perk but putting it through the company will probably cost you 3K a year more than if you run it privately and claim the mileage, when i started my company i bought a second hand BMW 328Ci for 4K cash and was effectively running the car for free because I could claim 6.5K a year tax free mileage.
It might seem a trivial amount, but this is what got your brother in trouble - handing the tax man 3K a year for the priveldge of renting a Focus RS is not good business management however much you like the car.
[quote=OwenC]
I am not particularly bothered what people think about me for driving a certain car whilst starting a new company, at the end of the day its the only passion I have, I dont buy expensive clothes, watches or holidays etc. This is by no means meant to sound pig headed, im simply stating cars mean everything to me and is the reason I work hard.
[quote=OwenC]
Wrong, wrong, wrong...your customers will be bothered by what you turn up in as a new start, particularly when it looks like you screwed over people to set up the new company (not saying that's the case, just what people will perceive). As a new business you have to eat humble pie for a while whilst it gets off the ground, the flash cars can come when you are established, and your customers know you can afford them, as you work your b
ks off to keep them happy.
listen to the many people who have set up their own businesses on here, chuck the car in , get a cheap respectable second hand motor and in a couple of years if all goes well your customers won't care if you turn up in Rolls Royce, also never scimp on clothes, first impressions count.
I am not particularly bothered what people think about me for driving a certain car whilst starting a new company, at the end of the day its the only passion I have, I dont buy expensive clothes, watches or holidays etc. This is by no means meant to sound pig headed, im simply stating cars mean everything to me and is the reason I work hard.
[quote=OwenC]
Wrong, wrong, wrong...your customers will be bothered by what you turn up in as a new start, particularly when it looks like you screwed over people to set up the new company (not saying that's the case, just what people will perceive). As a new business you have to eat humble pie for a while whilst it gets off the ground, the flash cars can come when you are established, and your customers know you can afford them, as you work your b
ks off to keep them happy.listen to the many people who have set up their own businesses on here, chuck the car in , get a cheap respectable second hand motor and in a couple of years if all goes well your customers won't care if you turn up in Rolls Royce, also never scimp on clothes, first impressions count.
Edited by mercfunder on Friday 24th December 12:00
OwenC said:
M3333: For one, the only creditor is HMRC, secondly its my company car that I like and have become a little attached to, so I have asked if it is possible to transfer it over on to my new company or on to me personally. I fail to see anything I have done wrong, I was merely a project manager type exec in the last company, I only wish the funds from the contracts I personally won last year were under my control at the time.
In that case I apologise. Sounds like your brother should have paid his tax bills, hopefully you can move on and run things a bit more sensibly! Good luck.
OwenC said:
The car is a Focus RS, nothing spectacular but not to shabby either. Repayments are £370/month before VAT which I think is good value for money.
At £370 per month for a Focus RS in relatively short supply that sound like a relatively low mileage and /or long lease to me.You may not care what other think but it will influence how other see you and behave towards you. I have seen this first hand when on the receiving end of comments from suppliers about free rental car upgrades. An RS is a toy not a tool unless you are doing track days / high performance mods etc as a business, sorry.
Starfighter said:
You may not care what other think but it will influence how other see you and behave towards you.
Exactly, when I got a builder round to quote for some work on my house and he turned up in a brand new Range Rover Sport with private plate I thought to myself, no fecking way.Edited by anonymous-user on Thursday 6th January 23:27
Get a loan & buy an ex lease from auction.
Lots of lovely 3 year old lease cars go through.
http://www.manheim.co.uk/
Lots of lovely 3 year old lease cars go through.
http://www.manheim.co.uk/
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