Purchasing a bike through the company for VAT purposes - creative accounting?

[nickAKA]

Post-April I'll no longer be eligible for any C2W schemes at work as I'll be classed as a partner but on the plus side I'll have more say on the financial side, so I was contemplating buying my next bike through the books & claiming the VAT back. Has anyone ever done this or does anybody understand "the rules" on how to do it without bending any tax rules and potentally upsetting HMRC?
Current thinking - I've recently set up a cycling club and the company is one of the sponsors, which means sponsored kit paid for with "advertising fees"; If we were to buy a bike "for the club" it could be purchased by the club, funded through sponsorship fees, OR could it simply be purchased by the company for the club and claimed as a company asset?

I'm not looking to defraud the tax man, I'm just looking for a way to buy via the company and hopefully save some money as I would on C2W...

 

[I like Skol]

You're avin a larf!

If the company buys the bike then it is the property of the company. You say you want to buy yourself a new bike.....

 

[vickster]

Just buy a reduced bike on an interest free credit card. The honest way

 

[Mattk50]

Get the company to buy it for you and treat it as a Benefit in kind

 

[flake99please]

Could the company register on the c2w scheme?

 

[nickAKA]

Could the company register on the c2w scheme?

I'll no longer be on PAYE so no mechanism to 'save' the tax as I understand it?

 

[nickAKA]

Get the company to buy it for you and treat it as a Benefit in kind

Ah, that's the way - classed as a tax free benefit in kind according to to the CAB... cheers!

 

[screenman]

CAB? Are they qualified tax accountants. Any VAT inspector would see right through it, so a big no from me. Been in business long enough to remember being able to claim for almost anything, times have changed and they needed to.

 

[Inspector Monkfish]

Nothing in the c2w scheme says you actually have to pay the money back, it's just most companies obviously want their money back and don't want to just buy bikes for peole. From section 2.6 of the Governments advice document

Another alternative is the workplace pool cycle model. This is a tried and tested
option for supporting staff in their commuting and for inter-site and business trip
travel which is not currently being well served by public transport. At its simplest, you
can purchase a suitable fleet of cycles for active travel and make them available to
employees either on a one-to-one or a pool basis. Work place schemes should focus
on attracting people who currently travel on less sustainable and less active modes,
such as their cars, between local meetings or work sites. Cycles for active travel
should be easily accessible both in terms of position, close to where they are needed
and are securely stored and maintained.

So the company can buy a bike and make it available to you with no requirement for you to pay for it. Although my accountant warned that depending on the value of the bike it could be considered a benefit (I was advised anything over 5k)

 

[I like Skol]

This 'creative accounting' you talk off. Isn't it the kind of thing we all lambast Amaz0n and offshore companies of that ilk for being guilty of and paying unfairly shrunken tax duties on their huge UK ear ed profits?
Strange how it is deemed obscene, immoral and unfair when they do it, but it's alright when you do the same.....

 

[BoldonLad]

This 'creative accounting' you talk off. Isn't it the kind of thing we all lambast Amaz0n and offshore companies of that ilk for being guilty of and paying unfairly shrunken tax duties on their huge UK ear ed profits?
Strange how it is deemed obscene, immoral and unfair when they do it, but it's alright when you do the same.....

't is the way of the world..... rules are for other people

 

[Supersuperleeds]

If the business is buying for legitimate business use then they will be able to claim the VAT back. If it isn't for business use then they cannot claim the vat back.

Chances of getting caught, next to none.

 

[bikingdad90]

What type of partnership is it? Incorporated Company and every partner is a company director or unincorporated?

Under the unincorporated route If you purchase a bike through the partnership and use it for any partners personal use then the asset is deemed to have been sold by the business as effectively stock taken for personal use and all partners end up paying more tax and NIC as the partnership profits are higher.

Also when it comes to disposal if the other partners gift the asset to you then it creates a capital gain for them as everyone owns a share of the bike.

A partnership is transparent and owns nothing, every partner is effectively self employed and accounts for their own tax affairs and each own a share of each asset.

If the partnership is an incorporated entity it’s a bit clearer as the bike belongs to the company and could get capital allowances but beware of the bike triggering withholding tax at 32% if it is deemed to be a directors loan outstanding 9months and a day after year end. Also HMRC see through the cleardown and drawdown if you do this at 9months and ignore the transaction treating it as if the loan is still outstanding.

 

[bikingdad90]

Also assume you are taking tax advice and legal advice and have sight of the partnership agreement which details the legalities, responsibilities and profit split etc? A good tax advisor will inform you of the impact of overlap profits (double tax in first two/three years) and your class 2 and class 4 NIC staged payment dates to avoid a huge tax bill!

Oh and don’t forget to register with HMRC ASAP or else you may get fined.

 

[oldwheels]

I bought a Columbus Trailer on the business to carry parcels to the post office. The parking situation made a vehicle almost impossible and we had the maximum weight parcels so it was quite legit. I did provide the bike myself for towing. It was labelled slightly tongue in cheek as Works Vehicle No. 4.