Private owner selling a company car

Pete.g

In the process of negotiating to buy a bmw 3 series from a company MD he says it was bought through the company books. Would there be any possible problems with the purchase as far as I'm concerned?

Thanks,

Pete.

Murphy_The_Cat

As far as i am aware there should be no problems.

The only major difference being that the log book will show the keeper as being Pete.g Ltd rather than Pete.g.

I would however check that the MD of the company really is the MD and also that the company really exists. Also, it would be a very good idea to get a HPI check done.

MTC

vansboy

Doing HPI type cheques in this instance, is a good idea.

Sounds like he might by trying some form of tax limitation stint, to benifit him, rather than something wrong, or dodgy.

But if he's willing to do something, that may be a 'bit' underhand, do you want to buy from this type of person??

VB

Threepints

vansboy wrote:

Doing HPI type cheques in this instance, is a good idea.

Sounds like he might by trying some form of tax limitation stint, to benifit him, rather than something wrong, or dodgy.

But if he's willing to do something, that may be a 'bit' underhand, do you want to buy from this type of person??

VB

If it is a tax stint as you say then as long as it is legal then it is not really underhand. I'm sure Martin would be proud of him :money:

wazza

dont know if it applies to cars but make sure vat is paid on the car. i recall that if you bought a car through the company for business you can claim vat back. i feel that may apply for vans/commercial vehicles and not cars but best to be sure. also when paying for the car make the cheque etc payable to the company and not the MD.

Murphy_The_Cat

vansboy wrote:

Doing HPI type cheques in this instance, is a good idea.

Sounds like he might by trying some form of tax limitation stint, to benifit him, rather than something wrong, or dodgy.

But if he's willing to do something, that may be a 'bit' underhand, do you want to buy from this type of person??

VB

Hi VB

I do have some experience about this one.
I own a small company and at one stage it was better for me to buy my company car and register the company as being the owner - in this way I could insure the car on the "company all vehicle policy".

However I now register the car with myself as the keeper, the advantage this time being that I am now able to build up my NCB (please note that it is sometimes a LOT more expensive with either option).
It also makes things easier for roadside checks etc if Mrs Cat is driving.

There is no tax limitation stint (stunt ?) that I am aware of that would make him want to do this.

But please do still do a few checks on him, the company & a HPI cheque.

MTC

p.s. depending on how much of a brass neck you have, try and find out how muich the BMW is valued at in his "books". For every £ over it's "books" value it is sold for, the company will have to pay corporation tax. For every £ under its "book" price it sells for, it will be deemed a loss on sales of motor vehicle and will make his accounts look worse.
Depending on how you/him are, erhaps this is a scenario to suggest.
"So Mr Compnay, you want to sell me your BMW for £7000, but you've only got it in your books at £6500. Do you realise that your companies going to get taxed on the difference ? How about I pay you £6500 for it and we both get a good deal out of it ?"
The worst he can/will say is no.
Take it from me - people who own companies enjoy saving tax and he may not notice the loss in the selling price in his joy at saving some tax !!

p.s. wazza is right about the cheque being made out to the company. But also consider paying part cheque, part cash and getting a reciept for each element. Perhaps your MD man would not be the first man to lose some paperwork if it meant him getting a few quid in his pocket. But you MUST get reciepts for what you have paid him.

vansboy

What he MAY have done, is bought the car as a business expense, had the tax liabilites paid & depreciated the value of the car, within his accounts, to such a low amount, that it could be purchased, by HIMSELF, personally, then se-sold at a higher amount,

This way there would be no 'profit' on the transaction, which would have been a taxable amount - but by it now becoming a 'personal' item & transaction, it does away with these tax implications.

VB

Murphy_The_Cat

vansboy wrote:

What he MAY have done, is bought the car as a business expense, had the tax liabilites paid & depreciated the value of the car, within his accounts, to such a low amount, that it could be purchased, by HIMSELF, personally, then se-sold at a higher amount,

This way there would be no 'profit' on the transaction, which would have been a taxable amount - but by it now becoming a 'personal' item & transaction, it does away with these tax implications.

VB

Nice one vansboy - a very interesting suggestion.

It would also mean that he could sell the vehicle tax free for the difference between what he bought it for grom the company and what he is selling it to pete.g for.

Up to now I'vee seen nothing on this thread to dissuade pete.g from making his purchase.

MTC

Murphy_The_Cat

gizmoleeds wrote:

Even if that is what he's done though, the car would still be a perfectly safe buy, as the taxman would simply give him a fine and a bill for unpaid taxes if they found out this was the case - they wouldn't take the car back from its new owner.

and it's doubtful that the taxman would be interested anyway unles the guy was an MD of a car dealership, or if he was doing (say) a car a month.

pete.g if the deals good, go for it.

MTC

vansboy

gizmoleeds wrote:

The latter part of your post is correct - you can only reclaim VAT on commercial vehicles, not ordinary cars..

Not strictly true, VAT is applied to the inital purchase price of a car & IS reclaimed, when the vehicle is used ONLY for business use.

It can then be resold, as many times as anyone wants, with VAT being paid/reclaimed, buy VAT registered people.

The term for this is VAT QUALIFYING vehicle.

The alternative is MARGIN vehicle, where VAT would only become due on the profit element, of a vehicles sale, to be paid by VAT registered owners/sellers.

Guess this guy isn't personally selling, as being VAT registered.

Not that this should have any diference, in this instance, but worth thinking about , if you use a car for business & don't have any personal use - you COULD save 17.5% of it's cost - thats NEW or USED (so long as it's VAT QUALIFYING!!

VB

Pete.g

Hi,

I have spoken to the guy today and the car is under the company name but he is more than happy for the bankers draught to be made out the the company and not himself. So everything looks above board. He has even said that when I go to pick the car up he will meet me at the company premesis to do the deal there. I have agreed a price and will be picking the car up later in the week. I will obviously be carrying out a HPI check (only £7 on ebay) and getting an independant inspection done before the deal is concluded (but thats another thread).

Thankyou all for the input and for setting my mind at rest.

Cheers,

Pete.