Buying a car from a ltd Co

[alistair1234]

I've seen a car on auto trader and after speaking with the 'owner' he's confirmed his employer own it and he's selling it for them as it was his company car (he is a director, but not on company house).

The company appear on the V5 logbook as the owner, they bought it second hand from a dealer.

As it was bought second hand, there is no VAT to think about now is there?

Also, how do I know he is authorised to sell it? Even if it was a ltd co with one employee, how would i know that one person is ok to sell it?

thanks

[Trevor555]

Make a traceable payment into the companies bank account only.

Tell them you'll need to see a chq book or bank statement to show it's the Ltd company.

Get them to give you a company invoice.

I'd also want to do the transaction at the company premises.

If none of the above, walk away.

And print off the Autotrader advert.... Very important......

And lastly, trust your gut instinct.

If it doesn't feel quite right walk away, my gut instinct has saved me a few times.

Edited by Trevor555 on Friday 7th June 15:10

[Speed addicted]

I think you would have to pay VAT.
I got the VAT back on my pickup and that was pre-registered so essentially a used car.
The company get's the VAT relief for any vehicle, new or used as far as I know. This is the first company car I've bought as a one person limited company.

Agree with the above, you would have to pay the company bank account, the one that's listed on the V5 as the owner.
I'd also want something to confirm the bank account details.

Edited by Speed addicted on Friday 7th June 15:26

[alistair1234]

But if the co is selling the car, surely the price they advertise it at is the price i pay including vat and they then pay it?

Also, there is no vat on a used vehicle. What do you mean relief on it?

Surely the vat is paid by the dealer that had it as a demo as they are the first owner?

[Darinz]

I'd ask the company for a quotation document, (if they sell goods/anything this shouldn't be a problem). You can then see the price in full and the amount due, whether or not it includes VAT (it COULD include VAT).

The doc could have the bank details on as well.

This would also reassure you the person has the right to sell the car on behalf of the company.

Typically car adverts where there will be VAT charged state something like "VAT qualifying". If they aren't in the business of selling cars (sounds like they aren't) they probably don't know this, but I imagine the price you see is what you pay. If you get the quote all should be clear.

[Darinz]

PS: it is perfectly possible there will be VAT on it even though the car is used.

EG:

Dealer buys car from manufacturer as demo. They pay VAT, reclaim it as it is for 100% business purposes.

They sell the demonstrator to a limited company and must charge VAT on it. The limited company uses the car as a pool car and so reclaims the VAT again, as it is 100% for business use. (same would apply if it was a taxi or commercial vehicle)

The limited company then sells to our pistonheads user, they have to charge VAT on the sale once again.

[t400ble]

Vat is applicable to commercial vehicles, in some circumstances

[ninjag]

Darinz said:

I'd ask the company for a quotation document, (if they sell goods/anything this shouldn't be a problem). You can then see the price in full and the amount due, whether or not it includes VAT (it COULD include VAT).

^ This. Unless you are VAT registered then all you need to worry about is the bottom line payable. The VAT treatment is for the company to worry about, besides how are you supposed to know how the VAT was treated when they purchased it? (i.e. 100% pool car, some personal use, all personal use etc).

Commercial vans (and applicable cars/pickups although this is still a grey-ish area) with no private use will have had the VAT fully reclaim by the company, same goes for HGVs.

As already said make sure you are dealing with the company and not the individual. Payment goes into the company bank account and to be super safe you should really only be dealing with a Director, a proper Director that is (who is registered on Companies House and holds a position of office) because they are the only ones who have guaranteed authority to do such transactions on behalf of the business. At the least get a letter of authority for the sale signed by a Director.

You do get some people with titles such as Director of Marketing or Sales Director but they don't hold a position of office.

[oop north]

There is probably no VAT - if a car (not commercial vehicle) then only circumstance VAT was originally recovered by company is if used 100% for business with no private use whatsoever. That seems Fairly unlikely if it was/is director’s personal use vehicle.

[Auto810graphy]

Cars only attract VAT if they have been owned by a company in connection with leasing, rental or demonstration purposes (there are a few more examples like funeral directors etc) and they would never be sold plus VAT, just advised that VAT can be reclaimed in different ways by dealers or exporters so don’t worry about that.

As for buying from the company, you need a letter on headed paper signed by a companies house registered director stating the person is able to sell the car and receive the proceeds.

Alternatively ask the company to issue you an invoice and pay them direct.