What £100k car to buy? Company Accounting Question

[Cpb1702]

Own company needs to increase turnover by £100k to win major long term contract with blue chip client. Work with this one client is limited to a % of total turnover.

Accountant has advised to buy and then, within a short period, re sell a car. Could take up to a £10k loss as worth it for size of long term contract.

Firstly is this nuts?

Secondly what car would you suggest buying in December / Jan and selling in March / April. Has to be from a main dealer and sold back to one, on the advice of the accountant.

My thoughts are:

Taycan
Ferrari Cali

Any other suggestions?

[joshcowin]

V12 vantage

[bobthemonkey]

New Range Rover ?

[N88]

I suggest you get a new accountant

It would be classed as purchase and then sale of an asset so only the gain or loss would hit your P&L

[J1990]

N88 said:

I suggest you get a new accountant

It would be classed as purchase and then sale of an asset so only the gain or loss would hit your P&L

This.
Unless you're in the motor trade then I have no idea how your accountant is expecting the purchase and sale of an asset to impact your revenue.


The rules here are really simply and quite strict.

Purchase Price = £100k
Depreciate 20%/year over 5 years (For the sake of simplicity, completely unrealistic figure)

If you sell for £50k after 5 years then you'll have depreciated the asset in the business fully and made a 'profit on disposal' which will be liable to corporation tax.
If you sell for £20k after 1 year then you'll make a 'loss on disposal' and be able to claim back some via corporation tax.


Unless your accountant is setting you up as a motor trader on the side and you're just going to be a terrible one on paper then it sounds like there's some major confusion here.

[Flumpo]

Cpb1702 said:

Own company needs to increase turnover by £100k to win major long term contract with blue chip client. Work with this one client is limited to a % of total turnover.

Accountant has advised to buy and then, within a short period, re sell a car. Could take up to a £10k loss as worth it for size of long term contract.

Firstly is this nuts?

Secondly what car would you suggest buying in December / Jan and selling in March / April. Has to be from a main dealer and sold back to one, on the advice of the accountant.

My thoughts are:

Taycan
Ferrari Cali

Any other suggestions?

Is your accountant at a lose end as Chris moyles is in the jungle?

Good luck whatever you decide.