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

[nickyboy]

You say you're not seeking to defraud the taxman but what you're proposing is exactly that.
If the bike is bought by the company and given to someone it cannot recover the VAT.
If the company donates it or whatever to a cycling club that would be ok if it could be shown that the bike was not for a particular person who happened to be a partner in the firm. Any half decent VAT or IR inspector would see right through this

 

[Mrs M]

You want a new bike, just pay for it!
Don’t be a tax dodger

 

[PaulSB]

You're going to be "classed" as a partner? Great example to set everyone else in the business.

My ex boss once told me how he engineered losses in the business to ensure his daughters received state support to attend uni. Fraud.

Deliberate tax avoidance of this type makes my blood boil. Pay your dues. If you can't afford it, don't buy it.

Unbelievable you're asking the question.

 

[Gunk]

All you’re saving is 20%, you could save that with a few phone calls.

 

[CanucksTraveller]

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)

That's true, although do you know if there are there any requirements around making it available to other employees?

My last company but one bought a fair old fleet of Batavus dutch bikes for a large site which was a couple of miles across. One man asked if he could commute home on one, and that was apparently no problem. Once he stenciled his name on it and kept it at home full time however, and then locked it at work with his own lock on it, the HR people did have a word and said that company bikes needed to be available to all because of tax rules. I'm not sure how accurate that excuse is. They might just have been trying to stop him being such a necky dickhead with their kindly provided bikes.

 

[Buck]

The only way you can legitimately gain any ”benefit” is if you were to ride your bike on work business on a regular basis. The accountant will then be able to allocate a % of the cost of the bike as a legitimate expense in the same way as they would with your car.

As far as VAT or tax creativity is concerned - avoid!

 

[srw]

Any half decent VAT or IR inspector would see right through this

As would any half decent financial controller. And a partner in the firm should hope that the financial controller is rather more than halfway decent.

 

[Deleted member 26715]

All you’re saving is 20%, you could save that with a few phone calls.

Yeah but he would then save 20% off the already reduced 20% price

 

[bikingdad90]

Following on from lots of just saving 20%, in reality you would actually save nothing. Under basic VAT principles, You can’t claim the VAT back as you are not making an onward taxable supply in the course of furthering the business so the VAT recovery is 100% blocked, reduced proportional to the amount of business use that is not home to work. Your self supply is an exempt supply.

 

[Inspector Monkfish]

That's true, although do you know if there are there any requirements around making it available to other employees?

I'm not an expert on the subject but reading what the government advice says....

....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....

Suggests to me that a company could choose to assign a bike to an individual if they so wished

 

[Pale Rider]

That's true, although do you know if there are there any requirements around making it available to other employees?
HR people did have a word and said that company bikes needed to be available to all because of tax rules. I'm not sure how accurate that excuse is. They might just have been trying to stop him being such a necky dickhead with their kindly provided bikes.

Quoting from the rules: "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."

 

[fossyant]

Your other partners might get a bit miffed you are doing a dodge. Next, cars ?

 

[Deleted member 26715]

Your other partners might get a bit miffed you are doing a dodge. Next, cars ?

He's probably just trying to catch up

 

[Milkfloat]

If I were becoming a partner, the last thing I would do as my first action is to do something financially dodgy.

 

[neil_merseyside]

'Classed' as a partner? is that a real partner with all the liabilities, or is it a fancy job description like vice president of steel washers? and nothing more than a tax avoidance scheme scam.
Don't ever be a partner unless you share an equal benefit (and the liabilities obv.) if you fiddle a bike without issue just imagine what the more long standing have been fiddling - you and they will be jointly and severably liable (I think is the term) when any of the scam bubbles burst.