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Car Purchase from Business Account

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muhammadaliabad
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Car Purchase from Business Account

Post by muhammadaliabad » Tue Mar 10, 2015 11:46 pm

Hello Gurus and Forum members,

I need advice regarding following transaction:

I want to purchase a car through company business account. I am purchasing car from my relative.

Q1: Can I make car payment from business account to my relative personal account?
Q2: Do i need to do any valuation of fixed asset before buying this car?
Q3: Can I claim this purchase of 10K as part of my 50K investment?
Q4: How can i transfer car ownership from personal name to company name?

Please give me advice regarding this.

muhammadaliabad
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Re: Car Purchase from Business Account

Post by muhammadaliabad » Thu Mar 12, 2015 7:36 am

108 views and no replies. Come on gurus....I am waiting for your reply.

hham1224
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Re: Car Purchase from Business Account

Post by hham1224 » Fri Mar 13, 2015 8:53 pm

Being a chartered accountant, I wouldn't recommend to purchase car from business account for many obvious reasons.

There are two things you need to consider here;

1. From the corporation tax point of view.
2. From HO point of view [business test].

I am not a solicitor but a tax adviser, the rules of the HMRC are more or less same as HO, you may buy a motor car from a business account provided it is intended for the wholly and exclusively for the purpose of your trade. Your nature of trade is self explanatory in a given scenario. If you fall within this wholly and exclusive test then I think HO wont have any objections.

Now comes the tricky part. Purchasing a car [not Van] from your business account means that there will be a taxable benefit of using a car and you will need to pay income tax and NIC class IA and employers NIC for using the car. A small business cant get a way the business test on a car.

The second point, if you put your car in your business this means that it is vulnerable to your creditors in case your business gets busted or you wish to close the company or business plus a tax liability as well. I dont recommend this option.

I hope this helps.

muhammadaliabad
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Joined: Fri Aug 30, 2013 6:18 pm

Re: Car Purchase from Business Account

Post by muhammadaliabad » Fri Mar 13, 2015 10:42 pm

Thanks Hammad for your valuable suggestion.

cappachino
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Joined: Mon Mar 25, 2013 9:24 pm
Location: LONDON

Re: Car Purchase from Business Account

Post by cappachino » Wed Mar 25, 2015 4:00 am

hham1224 wrote:Being a chartered accountant, I wouldn't recommend to purchase car from business account for many obvious reasons.

There are two things you need to consider here;

1. From the corporation tax point of view.
2. From HO point of view [business test].

I am not a solicitor but a tax adviser, the rules of the HMRC are more or less same as HO, you may buy a motor car from a business account provided it is intended for the wholly and exclusively for the purpose of your trade. Your nature of trade is self explanatory in a given scenario. If you fall within this wholly and exclusive test then I think HO wont have any objections.

Now comes the tricky part. Purchasing a car [not Van] from your business account means that there will be a taxable benefit of using a car and you will need to pay income tax and NIC class IA and employers NIC for using the car. A small business cant get a way the business test on a car.

The second point, if you put your car in your business this means that it is vulnerable to your creditors in case your business gets busted or you wish to close the company or business plus a tax liability as well. I dont recommend this option.

I hope this helps.
so if the car purchase amount is accepted by hmrc most likely it will be accepted by the home office

siavashes
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Re: Car Purchase from Business Account

Post by siavashes » Wed Mar 25, 2015 12:16 pm

cappachino wrote:
hham1224 wrote:Being a chartered accountant, I wouldn't recommend to purchase car from business account for many obvious reasons.

There are two things you need to consider here;

1. From the corporation tax point of view.
2. From HO point of view [business test].

I am not a solicitor but a tax adviser, the rules of the HMRC are more or less same as HO, you may buy a motor car from a business account provided it is intended for the wholly and exclusively for the purpose of your trade. Your nature of trade is self explanatory in a given scenario. If you fall within this wholly and exclusive test then I think HO wont have any objections.

Now comes the tricky part. Purchasing a car [not Van] from your business account means that there will be a taxable benefit of using a car and you will need to pay income tax and NIC class IA and employers NIC for using the car. A small business cant get a way the business test on a car.

The second point, if you put your car in your business this means that it is vulnerable to your creditors in case your business gets busted or you wish to close the company or business plus a tax liability as well. I dont recommend this option.

I hope this helps.
so if the car purchase amount is accepted by hmrc most likely it will be accepted by the home office

hi
if you buy it under your name , then definitely, no you CAN NOT claim it as your investment .
,however if you buy it under company name, you can claim it as investment, plusmore you should consider company car's tax before you do this .

cappachino
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Posts: 490
Joined: Mon Mar 25, 2013 9:24 pm
Location: LONDON

Re: Car Purchase from Business Account

Post by cappachino » Wed Mar 25, 2015 9:59 pm

siavashes wrote:
cappachino wrote:
hham1224 wrote:Being a chartered accountant, I wouldn't recommend to purchase car from business account for many obvious reasons.

There are two things you need to consider here;

1. From the corporation tax point of view.
2. From HO point of view [business test].

I am not a solicitor but a tax adviser, the rules of the HMRC are more or less same as HO, you may buy a motor car from a business account provided it is intended for the wholly and exclusively for the purpose of your trade. Your nature of trade is self explanatory in a given scenario. If you fall within this wholly and exclusive test then I think HO wont have any objections.

Now comes the tricky part. Purchasing a car [not Van] from your business account means that there will be a taxable benefit of using a car and you will need to pay income tax and NIC class IA and employers NIC for using the car. A small business cant get a way the business test on a car.

The second point, if you put your car in your business this means that it is vulnerable to your creditors in case your business gets busted or you wish to close the company or business plus a tax liability as well. I dont recommend this option.

I hope this helps.
so if the car purchase amount is accepted by hmrc most likely it will be accepted by the home office

hi
if you buy it under your name , then definitely, no you CAN NOT claim it as your investment .
,however if you buy it under company name, you can claim it as investment, plusmore you should consider company car's tax before you do this .
Hello
but on the other hand if the business is a sole proprietor business then the car would be allowed as a business asset and expense. If it is a company then yes it has to be on the company's name to be considered as an asset and expense.( this is my opinion)
Can you please give a little more detail on the tax liability.

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