Biggins

My company owns 1 vehicle (car) which is no longer used as a result of the director who ran the vehicle no longer being with the company. I have no requirement for the car as a company vehicle, so it is decided that the vehicle be sold and monies raised from the sale obviously put back into business.

The guide price for the vehicle indicates a current value of between £4,750 - £5,500. I might be interested in privately buying the vehicle but only have approx. £2k to spare at the moment.

Question is what is the Inland Revenues stance likely to be if its picked up?
Has anyone purchased any of their Company assets for reasonable amounts without repercussion?

Cheers.

blair

*If* the revenue pick it up then they are likely to treat the sale of an asset to an employee at less than market value as a benefit in kind and tax you on the difference between what you paid and what they think it was worth at the time of sale.

Perhaps a good option would be to take the car to a friendly dealer in your area and ask them to give you a value on the car - depending on its condition there can be quite a difference between book and what a dealer would pay you for it

This way, at least you have some evidence to prove that the car was worth less than book when you bought it

Biggins

Blair,

Good point regarding getting a dealer to value the vehicle as back-up but i'm sure even they wouldn't place it at £2k, which is all I have to spend. I'm just trying to gauge how likely the IR are to pick up on this asset disposal and whether me buying the vehicle will heighten suspicion. I could always get a family member to make the purchase I suppose.

At the end of the day I don't want to get into hot water over something so trivial. However, if I can buy the car for £2k without raising eyebrows, I will obviously be getting a small benefit.

blair

and if the IR do identify the fact it was sold under value you will only be paying tax at the top rate you pay on the difference between its book / dealer value and what you paid.

So if its worth 4000 and you buy it for 2000 the benefit is 2000 and you are taxed at, say, 40% on the 2000 which is 800. So you would effectively get the car for £2,800 if the revenue catch you, or if you follow the letter of the law (which I would obviously recommend that you do) and declare it on the year end returns for benefits in kind.

If they do find it and decide to through the book at your firm, there may also be fines and interest to pay as well getting into the revenues bad books. At the end of the day its up to you to decide if you want to take the risk

I know what I'd do

fast bloke

Get the company to put it in an auction - Say there is no history with it, it has never been serviced, badly crashed several times, has broken gearbox etc etc. Go and bid 2k for it - you can be sure no-one else will want it. If the IR ask the question it was sold at public auction, so the price is deemed to be fair and reasonable

Biggins

Cheers guys.

Food for thought.

carl

If you work on the basis of the Glass's trade-in/auction figures, then you can sell it to yourself cheap and the IR won't mind. Take a photocopy of the appropriate page of the book to keep as evidence.

Tentenths

The Revenue pay particularly close attention to company assets sold to directors of the firm... for obvious reasons