Buying/leasing a car through a legit LLP?

[TB404]

Hello,
I searched the forum and found some threads about this although they were fairly old and usually concerned using an LLP to circumvent an LTD company - this is not the case here.


I'm a partner at an LLP it's relatively small but a legit business with tax bills - although not VAT registered.

I want to buy a car probably a new/used hybrid, may lease if it's a better deal.
I wonder what are the rules/tax implications? The car is for personal use and has very little if any business use. Will I be liable for BIK treatment? What can I expect, does it make sense at all? What about fuel/servicing costs?

Thank you!

[anonymous-user]

It depends. It can still work out well in some scenarios

If most of the use is personal, it won’t work out as well overall as if most of the use was business

Does the llp bill multiple customers in the course of its business?

If the LLP isn’t vat registered due to it not reaching the registration threshold, some of the potential savings (vat) can be lost and there has to be a question about its ability to afford the car I suppose

[TB404]

Thank you,

The LLP is a consulting business where me and my wife work together providing consulting services to one large (foreign corporation) client - so we aren't VAT registered because we don't charge our client VAT.

I hope it helps? Our usual accountant is on holiday and isn't super creative normally...

[KevinCamaroSS]

Regarding the VAT you probably still have to register if you are over the threshold, you will also need to look into the exemption part of it. Why are your services not charged with VAT? Has you accountant gone over the rules with you? I am a bit out of date.

As regards the car why put it through the LLP if there is minimal business use? Just charge the LLP for the miles you do at 45p/mile.

[TB404]

KevinCamaroSS said:

Regarding the VAT you probably still have to register if you are over the threshold, you will also need to look into the exemption part of it. Why are your services not charged with VAT? Has you accountant gone over the rules with you? I am a bit out of date.

As regards the car why put it through the LLP if there is minimal business use? Just charge the LLP for the miles you do at 45p/mile.

Thank you we will check the VAT part again but it's been like this for a few years now and no problems.

Regarding the car, can you clarify what you mean by charging the LLP at £0.45 per mile? None of the use is business related but I'm trying to see if there's something to be had - having an LLP and a hybrid and all that - any ideas are welcome!

[anonymous-user]

If you are billing just one client, look for another. There are a few potential issues with disguised employment etc. that would largely go away with multiple clients. Not essential, but I’d be trying hard

Vat registration could be beneficial - you can claim back on legit expenses even if all your invoices are exempt due to being services billed internationally. A repayment from HMRC is always nice

costs of the car are pro rata’d between biz and personal use, the personal bit is not allowable to charge against llp profits generally

If the car is almost wholly for personal use, it is probably better to get it in your own name(s)

Someone who knows more will be along in due course and google will find some reasonable overviews but if you search this document for ‘motor’ and read the highlighted sections, you will start to get the idea

https://assets.publishing.service.gov.uk/governmen...

[TB404]

Thanks mate, I checked and we do have more than one client (sorry, I'm not client facing so not interested - also we aren't registered for VAT.

So, to summarise, an LLP - want to get a car for purely private use, is there anything at all that can be done? Ideas are welcome!

[paulrockliffe]

You should check the Place of Supply Rules for VAT, particularly with regard to whether your customer(s) have a fixed presence in the UK, whether they bill you from abroad or not.

[Dan_M5]

Thought you had to register for VAT if turnover exceeds 80k irrelevant of where the money comes from

[TB404]

Thank you people,
I'm less worried about VAT but the car, is there any advantage to buying/leasing through an LLP?

[paulrockliffe]

Dan_M5 said:

Thought you had to register for VAT if turnover exceeds 80k irrelevant of where the money comes from

He's saying his supplies are exempt from VAT because they take place outside of the UK.

[sideways sid]

Gotta love PH - guy asks about a car and ends up getting VAT advice instead!

OP, it seems there is no real advantage (and potential headaches) to buying a car through the business in your current situation.

It might be better to buy your car privately and reclaim business mileage at 45ppm, as someone suggested earlier. The payment will reduce Corporation Tax for the LLP, and not attract Income Tax personally.

In the absence of road journeys to your client, remember that any trips to your accountant, bank, tax office, etc, and any networking meetings and business-breakfast type events provided by your county council or similar would all constitute journeys that you could claim mileage for.

[TB404]

sideways sid said:

Gotta love PH - guy asks about a car and ends up getting VAT advice instead!

OP, it seems there is no real advantage (and potential headaches) to buying a car through the business in your current situation.

It might be better to buy your car privately and reclaim business mileage at 45ppm, as someone suggested earlier. The payment will reduce Corporation Tax for the LLP, and not attract Income Tax personally.

In the absence of road journeys to your client, remember that any trips to your accountant, bank, tax office, etc, and any networking meetings and business-breakfast type events provided by your county council or similar would all constitute journeys that you could claim mileage for.

Thanks mate, very helpful

[anonymous-user]

No advantage and many disadvantages to owning car through llp when almost all use is private is, as per my previous posts, my answer on that

Don’t ignore the vat reg. I have seen situations similar to yours where the vat reclaims are large enough to fund a very swish car

[TB404]

Thank you,
Will review the VAT with the accountants, many thanks!