Buying my company van

Lizmoretti

I own (or, more specifically, my limited company owns) a van.  It’s now seven years old and time to be replaced.  I think it’s worth around £15,000.

A friend told me that, with regards to my company’s accounts, the value of the van would have been written off after 4 years.  He says I can now buy it off my company for £1 and then sell it privately for £15k therefore avoiding the additional tax my company would have to pay.

I’ll also need to use an extra £15k from my company in order to replace the van, therefore meaning further tax savings.

Does this sound correct??

K_S

@Lizmoretti I'm not an accountant, but I don't think that's correct as per my understanding.

When the ltd. company is disposing of an asset to a director, the transaction is deemed to have taken place at market value, so the company's chargeable gain (taxable at the CT rate) will be based on a market value disposal, not the £1 that you pay.

Lizmoretti

K_S said:

@Lizmoretti I'm not an accountant, but I don't think that's correct as per my understanding.

When the ltd. company is disposing of an asset to a director, the transaction is deemed to have taken place at market value, so the company's chargeable gain (taxable at the CT rate) will be based on a market value disposal, not the £1 that you pay.

This was what I thought.  It feels like it’s too good to be true…

My friend is adamant that I can just write off the van within my company and take personal ownership of it, but if that was legal surely every company would just be buying stuff, waiting a few years and then selling it privately.

This same friend bought a van through his company, claimed back the VAT and then converted it to a camper which he uses for family holidays, so maybe not the best person to get advice from.

[Deleted User]

The van may well have been written off for tax purposes. However it, presumably, has a value of £15000. This will be a balancing charge for the company - increasing its taxable profits by that amount.

Lizmoretti

[Deleted User] said:

The van may well have been written off for tax purposes. However it, presumably, has a value of £15000. This will be a balancing charge for the company - increasing its taxable profits by that amount.

Here’s a thought.  What if I sold it to myself for £2,000?  Who’s to say what the value is until someone buys it?

You could surely argue the only way to know its true value would be to auction it.

[Deleted User]

Lizmoretti said:

purdyoaten2 said:

The van may well have been written off for tax purposes. However it, presumably, has a value of £15000. This will be a balancing charge for the company - increasing its taxable profits by that amount.

Here’s a thought.  What if I sold it to myself for £2,000?  Who’s to say what the value is until someone buys it?

You could surely argue the only way to know its true value would be to auction it.

It’s a bad thought. Even if you only paid £1 for it it is the market value that would count.

Straying into tax evasion.

https://www.accountingweb.co.uk/any-answers/transfer-company-vehicle-to-director?amp

chipolatta

Hi Lizmoretti, I was just wondering if you ever found a solution to your question?