Minibus private hire query, bear with me.

Rolandtheroadie

We're soon to be 6 of a family (wifes having twins)and instead of a peoplecarrier that cant hold people and luggage at the same time, we were just going to buy a minibus.

Now here's the thought. Why have a minibus and attempt to make money from it?

Basics. Have D1 on my licence, would be a 9 seater (driver plus 8) so no PSV required and fully legal to drive on my licence.

I know I would need some sort of operators licence and be licenced myself to drive it/carry passengers.

It would be on a private hire basis (phoned to uplift/ prebooked) and really only infrequently (the odd airport run, taking (small) local groups on excursions, people to social events etc).

Ok, so heres the queries.

1. VAT. Would it benefit me to register for VAT and claim back the vat on the minibus? If I registered, would I also be able to claim VAT back on fuel and all other expenses where VAT is applied.

2. Anyone any ideas of average insurance prices for a business use minibus?

3. Any other Info on how to go about it appreciated.

big_gay_kirk

as you say, you have to be licenced through the local authority.. these vary with their requirements, so chck with them.. the vehicle will need to be less than ten years old (usually) and it will (possibly) have to be regualrly inspected.... as for insurance.. varies so much depending on where you are.. if you know a friendly private hire/ taxi driver with a similar vehicle, ask him'her.. you may find it well worh your while to buy some public liability insurance.... as for vat.. depends on how much you earn, iirc.. check out the inland revenue website, or phone up your local tax office... you'll have to register to pay ni and income tax as if self employed anyway.... and for gods sake don't buy an LDV if you think you'll be going a long way in it.. they are hellishly uncomfortable and thirsty....

Rolandtheroadie

Lol, thanks kirk, on the LDV thing, thats a given (bring back the sherpa, all is forgiven)

Vivaro, trafic, torneo, caravelle and perhaps vito are the options so far.
Probably around 3 years old (5 year limit for first registering as private hire).
The VAT is more to do with I'll be paying vat (probably £1000-1500) on the minibus in the first place and was wondering abou claiming this back.

Probably register it through the wife as my tax is already enough (and she'll only be part time). The private hire idea is more because I only work a 3 day week and we need something big for hols and transporting the growing brood (Mexico earlier this year, Silloth from here on in) so if we've got one anyway, we may as well try to profit from it.

We'd be 1 vehicle down (03 plate tdci fiesta for sale soon) and already pay about £30 ins for that a month. I'm guessing around £100 per month, hopefully less but who knows (probs more).

JasonLVC

The VATman is well aware of these type of 'scams'. They are also popular with executives who buy yachts 'for chartering' and helicopters 'for providing fun rides to the public'....when the reality is they are used for private purposes most of the time.

To reclaim all the VAT back, you need to be using the vehicle for a business purpose and as the minibus seats less than 10, your fares would be subject to VAT which may make you more expesnive than competitors should you register for VAT.

If you are going to use it for personal use, then HMRC will either seek to block all input VAT recovery OR require an apportionment of the input VAT - so you may get some of the VAT back, but not all of it. You state you intend only to use it for the 'odd airport run' which doesn't sound like a business to me, sounds like someone wanting to avoid the VAT charge on the purchase - I'm not judging you, but that is how HMRC will see this. Why would any businessman spend £10k on a van and then only make £1.50 from it every month?.

Registering for VAT (in order to reclaim the VAT), you would need to be mindful that HMRC upon your 1st VAt return will ask questions about purchases, etc and may draw their attention to you if you are only taking £1.50 a week in fares but claiming £3k of VAT every quarter. They may question if the business really is a business or just a pretence by someone trying to get VAT back on an expensive purchase (like a yacht or chopper).

You would be able to reclaim VAT on running costs of the minibus - but only insofar as the fuel used for business purposes (ie, taxi jobs). You'd need to keep detailed records of personal/business miles with income from passengers to back up those figures. HMRC will see you've done 2,000 miles of business and then note you've got 10,000 miles on the clock so will either think you are supressing takings or that the vehicle is more private than business use.

It can be done, just do it properly and don't get too greedy as if you get sloppy or reclaim too much VAT you will appear on HMRC's radar and they will unpick anything that shouldn't be.

Ppersonally, I'd take the VAT hit and keep off HMRC's radar altogether until you see how things pan out as you would also have to consider register as self employed, declaring income tax on takings, etc......

Hintza

I was looking into a slightly different angle; Landrover Defender for towing and doing 2-3 days a month corporate/4x4 work with it. Primarily to pay for the vehicle and working on the principle a change is as good as a holiday.

It was the insurance that was going to be the killer meaning I would have had to 5-7 days a month to make it viable which would be too much with other business commitments.

Rolandtheroadie

The post is all about doing it officially, not about any sort of scam.

If it was just going to be a scam, I wouldnt be buying such a new minibus (it must be less than 5 years old to be registered as private hire)
It would have to pass the more intensive test for carrying paying passengers, and would also need MOT'd seperately for private use. More expense.

I need something to carry my wife myself and 4 children and everything that goes with it. Thats why we were going to buy a minibus.

"odd airport run" was to give the idea that it would be used very little for private hire. Primarily for family use, it will not be clocking up tens of thousands of miles per year.

I already do 10000 miles per year in my own car so to be declaring it's went up 12k but 10k was own use is not unusual.

So your saying it may not be worth my while registering with the VAT man. Thank you for that, you're probably right.

As far as registering as self employed, that would be getting done anyway. The vehicle will be legitimately registered as private hire and the driver would be licenced with the local authority as well (£338 for operators licence and £128 for my licence).
It's not really to make my fortune, only to assist with the costs involved in our family transport.

Rolandtheroadie

Hintza wrote: »

I was looking into a slightly different angle; Landrover Defender for towing and doing 2-3 days a month corporate/4x4 work with it. Primarily to pay for the vehicle and working on the principle a change is as good as a holiday.

It was the insurance that was going to be the killer meaning I would have had to 5-7 days a month to make it viable which would be too much with other business commitments.

I only work 3 days a week in my current job so i'm off 18 days per month which would allow for a bit of commitment to it. I'll get a quote or 2 today for insurance and start on the figures.

sjaypink

has this idea came about mainly because you think people carriers are too small?

if the driving factor here is to do it to make money then fair enough, but just thought id through my tuppence in re people carriers that cant fit people and luggage....
you are right with a lot of them, the zafira is probably the worst example! :eek: galazy, sharan and espace barely better. but the carravelle/ transporter things are really spacious, as are the merc buses.

ive got an old toyota estima which really is big enough to seat 8 very comfortably plus fit a three wheeler, stroller, baby walker, box of wellies, changing bag, 6 school bags, and 8 coats in the boot- honestly!

just occurred to me if its just a casual thing the extra money made would not (to me) make up for the potential inconvinience of having a minibus as opposed to a regular people carrier. it wouldnt fit in the tiny school car park, it wouldnt be able to park in the town centre (multi storey height restriction), it doubt it would even fit on our drive without blocking the pavement! plus i use mine as a dumping ground! it would be annoying to have to keep getting the things out that 'live' (the pushchairs, box of wellies-too big and too dirty to keep in the house!) there everytime it was booked.
of course i realise im now going off on my own little tangent and these are all personal things , im sure youve already assessed all this. good luck anyway.

Rolandtheroadie

Thanks for that sjaypink,
They're all very valid points you raise. The toyota was something I had looked at when first thinking of a peoplecarrier.
We had thought of a 1997-2001 grand espace as they seemed bigger than anything else.
The minibusses I'm looking at (apart from the torneo I think, probably just a transit thing) all seem physically smaller than most and more caravelle sized.
We also used to have a touring caravan and may again one day (holidays abroad cost a fortune 2 adults and 4 kids) so felt the minibus would tow one better as well.

thanks again

JasonLVC

My reference to 'scam' was in quote marks becuase it is very easy to do something quite innocently but for HMRC to view as deliberate.

To register for VAT and reclaim input tax is a big jump and if you've not clarified in your own mind as to whether you'll be doing a few runs to the airport or a more full blown career then it exposes you to attack from HMRC.

I wasn't implying you intended to do anything underhand, but you need to be careful that you actions are not misconstrued by a very aggresive Vatman. For a bit of incidental work here and there, the input tax you can reclaim on the van/fuel may be offset against you having to charge VAT to your customers and an inspection from HMRC at some point asking questions about the van - which was what I was trying to cvoer off in my post.

Registering for VAT shouldn't be done lightly as it burdens you with great responsibilities and potential debts and admin which a fledging idea really doesn;t need to get bogged down in. As an aside, the VAt on the van can still be reclaimed within three years of you registering for VAT provided you still have the van so go 24 months as a business, if it is a goer, then register for VAT and then you can still claim your VAT back on your van you originally purchased.

hewhoisnotintheknow

I wouldnt pick anyone up in my car if they had a bear with them