Speculating - Have I got this right ?
Discussion
I can't see what the 120K profit has to do with anything. The 120K is an investment in an asset, hopefully an income generating asset. When a company buys a gym equipment, a bigger, a building to rent out, or anything of similar nature, they do not have to return the cost of the asset, unless it is an expiring asset after a predefined number of "uses" or in this case "rentals". In any case it is a commercial decision if you do indeed buy an asset that does not make you a profit (it happens ALL the time).
Another point you are missing is that the asset has a residual value, therefore the loss (depreciation) on the asset is all you need to make up on rentals. You wouldn't want to allow the company to have no incomes, but massive depreciation, unless you have entered enough capital in the company to offset that, else you would be wondering into insolvency territory.
Finally, another bonus in theory is you can set the depreciation against profits, this to my mind would be easier to achieve, since you are less likely to have an inspection and aggressive assessment. However, it is too expensive to be considered a pool car, and therefore many questions will be asked by the Revenue.
BUT I also think you are massively underestimating HMRC if you think you will be able to get such a refund from HMRC as a start up. You WILL need to prove no personal use of the car, and if you can't, well you can only treat a percentage of the VAT as input tax. Otherwise you will need to account for output tax on the personal use portion.
Also you will need to pay tax, at your highest rate, on I think its 35% of the price of the car, upto a maximum of 80,000, if you use the car for any private use.
Another point you are missing is that the asset has a residual value, therefore the loss (depreciation) on the asset is all you need to make up on rentals. You wouldn't want to allow the company to have no incomes, but massive depreciation, unless you have entered enough capital in the company to offset that, else you would be wondering into insolvency territory.
Finally, another bonus in theory is you can set the depreciation against profits, this to my mind would be easier to achieve, since you are less likely to have an inspection and aggressive assessment. However, it is too expensive to be considered a pool car, and therefore many questions will be asked by the Revenue.
BUT I also think you are massively underestimating HMRC if you think you will be able to get such a refund from HMRC as a start up. You WILL need to prove no personal use of the car, and if you can't, well you can only treat a percentage of the VAT as input tax. Otherwise you will need to account for output tax on the personal use portion.
Also you will need to pay tax, at your highest rate, on I think its 35% of the price of the car, upto a maximum of 80,000, if you use the car for any private use.
Yep, buy a company "pool" car, claim the VAT, and wait for the VAT man's visit the very next month. Anything to do with 'cars' and 'vat' in the same sentence will be scrutinised to death. And Inland Revenue is also one big happy family under HMR&C guise, who will also be checking for possible BIK at the same time.
However a director in a recent tribunal won, with a company M-Benz with VAT claim. He showed the car stayed on Co. premises, he lived a few yards down the road so had no need to drive home, and he had another nice car for private use anyway (call me a cynic but prob. for wife
)
So entirely possible if set up right, but will have to be for business journeys only, and be prepared for the hassle......... and don't think HMRC wouldn't be parked up somewhere on a Sunday to check. If the revenue haul is big enough to justify the overtime and they're suspicious, they'll 'ave you!!
However a director in a recent tribunal won, with a company M-Benz with VAT claim. He showed the car stayed on Co. premises, he lived a few yards down the road so had no need to drive home, and he had another nice car for private use anyway (call me a cynic but prob. for wife
) So entirely possible if set up right, but will have to be for business journeys only, and be prepared for the hassle......... and don't think HMRC wouldn't be parked up somewhere on a Sunday to check. If the revenue haul is big enough to justify the overtime and they're suspicious, they'll 'ave you!!
crikeymikey said:
I've tried to follow this, guys, but it's given me a bit of a headache.
At the risk of being shot down, isn't it a bit souless to be trying to get a supercar on the cheap? Supercars are about excess. Surely you should be blowing huge wads of cash and not giving a rats ass? That's more in the spirit of Italian supercar ownership.
Simon's probably a great example of how not to do it, but what style!
The above is meant in good humour and not intended to cause offence (apart from the bit about Si, obviously!).
Who is Simon?
Nevermind, I know who you mean now
>> Edited by Oakey on Thursday 25th May 15:40
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