Receiving an old Company Car (free?)

Mangle

OK - boss had a BMW company car, bought and paid for, and apparently written off at zero value (it's 6/7 years old). So, it is on the company books at zero pounds. He now arranged a new company car, and wants to "give" me the old one! Nice. But, Company Accountant seems to be saying this will involve me paying a fair whack of tax (Benefit In Kind). Is there any way of getting around this - for example, the company could sell it to my partner (we are not married), so that would mean no tax implications for me.....correct?

00ec25

https://www.gov.uk/expenses-and-benefits-assets-bought-sold-or-given/work-out-the-value

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21655
the lesser of
- the expense originally incurred by the person transferring the asset in producing or acquiring it or
- the market value at the date of transfer (see EIM21632)
less
any sum paid for the asset by the director or employee.

Mangle

Wow, immensely complicated. Can't the company just sell it to my partner, with no tax implications? I am sure the company could sell it to a garage for £100, with no ramifications. So why not sell it to my partner for £100, same result?

molerat

Your partner would receive the benefit by virtue of your employment so you could still be liable to tax on that benefit.

Mangle

Thank you. But.....the chances of HMRC finding out are....?

agrinnall

High, because the company accountant has indicated that it will be reported as a BIK.

*~Zephyr~*

Mangle wrote: »

Thank you. But.....the chances of HMRC finding out are....?

Well, if the vehicle is a company asset, so it will have to be shown in the accounts how it is disposed of.

If the vehicle has zero value, selling it to you/your partner for £100 will result in a £100 profit on asset disposal in the accounts.

The company will have to show where that money came from on their accounts which are submitted to Companies House and HMRC.

Even if they give it away for free, they have to show how it was disposed of, so HMRC are notified.

le_loup

Mangle wrote: »

Thank you. But.....the chances of HMRC finding out are....?

Well, if you want to commit fraud, that's a different matter.

[Deleted User]

Perhaps I am missing something? If the op buys the car from the company at full market value there is no issue. 00ec25 has made a helpful first post.

The issue is confused by the use of the word 'gift' in the first post followed by 'sell' in post 3.

Obviously one must also cast doubt on the car 'being on the books at zero pounds'. Simply, what is the car worth (independent valuation)? That is the price the op should be paying and the value on disposal.

00ec25

The boss is transferring ownership of his old car to a current employee. As such the relationship is one stemming from the fact of employment, and thus leads to a BIK. The value of the BIK is based on whichever is the lower of the 2 net amounts:
a) original purchase cost of the car paid by the company less any money the OP pays to the company for the car
or
b) current market value of the car less any money the OP pays to the company for the car

So if OP pays full market price there is no BIK. Only if OP gets it for free or at a discount to market price will there be a BIK.

I know (but can't be bothered to find ATM) the obvious loophole of transferring ownership to a spouse of an employee is also subject to the BIK rule above. However, I don't know if there is anything that covers (co-habiting) "partners" which would therefore differentiate such persons from the perfectly kosher arms length situation of the company disposing of the car to a dealer or stranger in the street at a free/discounted price. The latter case of course being the normal way a company disposes of its end of use assets and naturally therefore no employment relationship exists so the purchaser/acquirer does not face any tax issues if they get it at sub market value as they have no connection with the company other than the fact they now acquired one of its old assets.

sheramber

When my husband's company offered him the chance to buy his old company car they said they would send it to auction but arrange with the auctioneer to sell it to him.