Discussion
Yes, fraud regulations.
If something is sold at obviously less than its correct market value to a connected person within a company, the Revenue will not be amused.
If the company does carry this transaction through, the recipient of the vehicle will, at the very least, be assessed on the receipt of the car through the Benefit in Kind system.
If something is sold at obviously less than its correct market value to a connected person within a company, the Revenue will not be amused.
If the company does carry this transaction through, the recipient of the vehicle will, at the very least, be assessed on the receipt of the car through the Benefit in Kind system.
Why would the company pay £10,000 for something and sell it for £1,000 (irrespective of VAT considerations)?
Also, would the "someone" be somebody genuinely totally unconnected to the company?
To understand what I mean by "unconnected", you will need to check the Companies Act definitions of "Connected Persons".
Also, would the "someone" be somebody genuinely totally unconnected to the company?
To understand what I mean by "unconnected", you will need to check the Companies Act definitions of "Connected Persons".
Years ago we had a row with the Revenue. We had this utterly crappy pool car - an old Ford Granada that anyone could take for personal convenience. The car was scratched to hell and had dents all over it. Then I noticed that the insurance was costing £2000 per year. As such, I thought "what the hell, let's get rid of it". I couldn't sell it because it was a heap of junk. Eventually I sold it to an employee for £100 to get it out of my hair. Thought no more of it. However, a year later we had a Revenue audit and the auditor used his little book and told us the car was worth a couple of grand and that it was a BiK to the employee. We, however, stood our ground and the Revenue eventually backed down.
The Revenue will recognise a bona-fide situation. The key to getting them to see the "truth" is by having logical and, very importantly, commercial reasons for doing what you did.
Deliberately setting out to supply a vehicle at less than market value to a director, employee or a person connected to a director or an employee would be much harder to explain away on "commercial" grounds.
Deliberately setting out to supply a vehicle at less than market value to a director, employee or a person connected to a director or an employee would be much harder to explain away on "commercial" grounds.
I am clueless in all aspects of Tax, but I do remember that there would be no CGT due on a car that is sold by an individual at a profit, (May have changed since I was taught.) what would the implications be if a director bought a car, for 10k and sold it to the company a few months later for 20k, then the company disposes of the car for market value a few more months down the line at a genuine loss. There is probably a reason why you can't do it, but I have always wondered if it was a loophole that could be taken advantage of.
Tuscan Tart said:
I am clueless in all aspects of Tax, but I do remember that there would be no CGT due on a car that is sold by an individual at a profit, (May have changed since I was taught.) what would the implications be if a director bought a car, for 10k and sold it to the company a few months later for 20k, then the company disposes of the car for market value a few more months down the line at a genuine loss. There is probably a reason why you can't do it, but I have always wondered if it was a loophole that could be taken advantage of.
A very good point as there are some very hopeless "buyers" out there.......Gassing Station | Business | Top of Page | What's New | My Stuff