Personally Buying A Car From Own Company
Discussion
I've situation where I'd like to buy the company car I use from company I'm the director of.
Our accountant says fine with a valuation to support what I pay for it but seem a bit vague on what is a solid valuation.
Has anyone done this before?
I'd like to do it as fully at-arms-length as possible to keep HMRC happy and mindful online valuation (from WBAC or Motorway) doesn't always match what they'd pay when you go ahead and have it inspected etc. I'm not trying to gain a benefit by having it under of overvalued.
Our accountant says fine with a valuation to support what I pay for it but seem a bit vague on what is a solid valuation.
Has anyone done this before?
I'd like to do it as fully at-arms-length as possible to keep HMRC happy and mindful online valuation (from WBAC or Motorway) doesn't always match what they'd pay when you go ahead and have it inspected etc. I'm not trying to gain a benefit by having it under of overvalued.
I bought one of my old company cars, I’m just an employee not a director/shareholder.
VAT was payable (Multi billion pound turnover, fleet was a seperate company) but the price as quoted matched the market value as supplied by the company that bought up most of the fleet disposals. I paid a price that didn’t show VAT separately when I was given the quote but when the final invoice was sent it was shown separately. I didn’t pay extra IYSWIM
VAT was payable (Multi billion pound turnover, fleet was a seperate company) but the price as quoted matched the market value as supplied by the company that bought up most of the fleet disposals. I paid a price that didn’t show VAT separately when I was given the quote but when the final invoice was sent it was shown separately. I didn’t pay extra IYSWIM
orbit123 said:
I've situation where I'd like to buy the company car I use from company I'm the director of.
Our accountant says fine with a valuation to support what I pay for it but seem a bit vague on what is a solid valuation.
Has anyone done this before?
I'd like to do it as fully at-arms-length as possible to keep HMRC happy and mindful online valuation (from WBAC or Motorway) doesn't always match what they'd pay when you go ahead and have it inspected etc. I'm not trying to gain a benefit by having it under of overvalued.
Who are the shareholders of the company?Our accountant says fine with a valuation to support what I pay for it but seem a bit vague on what is a solid valuation.
Has anyone done this before?
I'd like to do it as fully at-arms-length as possible to keep HMRC happy and mindful online valuation (from WBAC or Motorway) doesn't always match what they'd pay when you go ahead and have it inspected etc. I'm not trying to gain a benefit by having it under of overvalued.
BlackTails said:
orbit123 said:
I've situation where I'd like to buy the company car I use from company I'm the director of.
Our accountant says fine with a valuation to support what I pay for it but seem a bit vague on what is a solid valuation.
Has anyone done this before?
I'd like to do it as fully at-arms-length as possible to keep HMRC happy and mindful online valuation (from WBAC or Motorway) doesn't always match what they'd pay when you go ahead and have it inspected etc. I'm not trying to gain a benefit by having it under of overvalued.
Who are the shareholders of the company?Our accountant says fine with a valuation to support what I pay for it but seem a bit vague on what is a solid valuation.
Has anyone done this before?
I'd like to do it as fully at-arms-length as possible to keep HMRC happy and mindful online valuation (from WBAC or Motorway) doesn't always match what they'd pay when you go ahead and have it inspected etc. I'm not trying to gain a benefit by having it under of overvalued.
I guess I have autonomy to set the price sold for but would like to have it entirely by the book.
You’ve got a few angles to consider:
- You’re a director. That means you owe what are called fiduciary obligations to the company to act in its best interest in preference to yours and not to make a profit at its expense. You really want to have shareholder sanction for a sale by the company to you, and the shareholders should be told to get their own valuation before they sanction - ie be fully informed in advance of saying yes.
- The shareholder is a trust. The trustees of a trust are able to act for a trust. You’re a trustee. But you can’t simply pop your director’s hat off, pop your trustee’s hat on and say, “yep, that price works”, and sign the contract of sale. This is because a trustee owes the same sorts of fiduciary obligations to the beneficiaries of the trust as a director owes to his company. The beneficiaries are I assume the employees. So now it becomes the employees who need to sanction this sale on a fully informed basis.
- I guess the next step will be that you’re one, and possibly the only, employee. If you’re one of a few, the others need to give a fully informed consent. If it’s just you, you can do the hat swapping routine by yourself. But in either event, you should have a weather eye on creditors of the company.
- If the company has financial issues which might mean it could be said to be bordering on insolvency, then as a director you need to consider whether creditors would or might be prejudiced by this sale. Is full value coming to the company? If the company subsequently went under, a liquidator could look at the sale with a view to coming after you for a shortfall in value.
- The taxman angle. The taxman might be one of the creditors who’d kick off under the preceding heading, but the more immediate concerns are whether VAT is accounted for properly on a sale and whether the value of the sale is sufficiently under market value that you’re really getting an unaccounted for benefit in kind.
All that said, unless this is a highly valuable car, chances are that the amounts at stake (the difference between true value and transaction value) won’t make it worth anyone’s while coming after you. But that can be a slightly uncomfortable gamble for many people.
- You’re a director. That means you owe what are called fiduciary obligations to the company to act in its best interest in preference to yours and not to make a profit at its expense. You really want to have shareholder sanction for a sale by the company to you, and the shareholders should be told to get their own valuation before they sanction - ie be fully informed in advance of saying yes.
- The shareholder is a trust. The trustees of a trust are able to act for a trust. You’re a trustee. But you can’t simply pop your director’s hat off, pop your trustee’s hat on and say, “yep, that price works”, and sign the contract of sale. This is because a trustee owes the same sorts of fiduciary obligations to the beneficiaries of the trust as a director owes to his company. The beneficiaries are I assume the employees. So now it becomes the employees who need to sanction this sale on a fully informed basis.
- I guess the next step will be that you’re one, and possibly the only, employee. If you’re one of a few, the others need to give a fully informed consent. If it’s just you, you can do the hat swapping routine by yourself. But in either event, you should have a weather eye on creditors of the company.
- If the company has financial issues which might mean it could be said to be bordering on insolvency, then as a director you need to consider whether creditors would or might be prejudiced by this sale. Is full value coming to the company? If the company subsequently went under, a liquidator could look at the sale with a view to coming after you for a shortfall in value.
- The taxman angle. The taxman might be one of the creditors who’d kick off under the preceding heading, but the more immediate concerns are whether VAT is accounted for properly on a sale and whether the value of the sale is sufficiently under market value that you’re really getting an unaccounted for benefit in kind.
All that said, unless this is a highly valuable car, chances are that the amounts at stake (the difference between true value and transaction value) won’t make it worth anyone’s while coming after you. But that can be a slightly uncomfortable gamble for many people.
Gassing Station | Business | Top of Page | What's New | My Stuff