Purchasing a bike through the company for VAT purposes - creative accounting?
- Thread starter nickAKA
- Start date
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vickster
Legendary Member
But I still want to avoid tax....
Pale Rider
Legendary Member
The remarks made by Lord Pullman, the Scottish Lord Justice General in 1929 in the case of Ayrshire Pullman Motor Services v Inland Revenue, are still deemed to be relevant.
Only a judge could use the phrase 'put the largest possible shovel in his stores', but I think the meaning is clear.
“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores.
"The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket.
"And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue."
Only a judge could use the phrase 'put the largest possible shovel in his stores', but I think the meaning is clear.
“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores.
"The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket.
"And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue."
slowmotion
Quite dreadful
- Location
- lost somewhere
The tax rules for company vans used to be that a company could provide you with a vehicle if it's main purpose was for the business. All the fuel, insurance costs, servicing, VED etc could be paid for by the company and were not taxed as a benefit to the user if it was solely used for work. Commuting to work in it was allowed, but if you deviated from the direct route between home and work, the mileage was taxed as private use.
The use of a company bicycle might have similar restrictions but I'm not an accountant or a taxman.
BTW, I believe that HMRC have greater powers than the police when it comes to smashing down your front door at three in the morning.
The use of a company bicycle might have similar restrictions but I'm not an accountant or a taxman.
BTW, I believe that HMRC have greater powers than the police when it comes to smashing down your front door at three in the morning.
winjim
Smash the cistern
Don't hate the player, hate the game.
PaulSB
Legendary Member
- Location
- Chorley, Lancashire
While I'm totally against this type of action I'll offer a word of caution. A very small deviation from the norm or fiddle if found by HMRC can lead to significant problems. Consider the following genuine occurrence.
Around 20 years ago the business I managed received a visit from HMRC. It was a random, routine inspection. During the inspection a single receipt for £50/60 for petrol was found amongst my expenses claims. I drove a diesel. The inspectors immediately asked why. This is the potential level of detail they may go in to.
At first we were flumoxed. The receipt was around 18 months old. HMRC assumed I was buying petrol for another vehicle and claiming it under expenses. Eventually I remembered the day I accidentally put petrol in my diesel car. We produced the invoice for motorway rescue and the one from my garage for draining the fuel tank and flushing the system. All was good.
However. HMRC decided to dig further in to my expenses claims. Nothing was there to be found and nothing was. I was asked to prove my business mileage exceeded 18,000 miles. I was driving +/- 30,000 pa. I forget what the exact rules were but this number was important for personal taxation.
I should have kept a log of personal and business mileage. It's such a pain in the arse I'd given up. The company didn't require it and was happy if I paid for the occassional tank of diesel myself.
HMRC required me to prove two years of business travel. Eventually we managed it but it took +/-12 months to get them off our back and cost Lord knows how much.
So by all means go ahead and fiddle your VAT. Keep in mind if HMRC come calling and find errors or fiddles they will dig and dig and dig. They can go back seven years and your records had better be perfect to withstand that.
Your other partners will probably be delighted.
Around 20 years ago the business I managed received a visit from HMRC. It was a random, routine inspection. During the inspection a single receipt for £50/60 for petrol was found amongst my expenses claims. I drove a diesel. The inspectors immediately asked why. This is the potential level of detail they may go in to.
At first we were flumoxed. The receipt was around 18 months old. HMRC assumed I was buying petrol for another vehicle and claiming it under expenses. Eventually I remembered the day I accidentally put petrol in my diesel car. We produced the invoice for motorway rescue and the one from my garage for draining the fuel tank and flushing the system. All was good.
However. HMRC decided to dig further in to my expenses claims. Nothing was there to be found and nothing was. I was asked to prove my business mileage exceeded 18,000 miles. I was driving +/- 30,000 pa. I forget what the exact rules were but this number was important for personal taxation.
I should have kept a log of personal and business mileage. It's such a pain in the arse I'd given up. The company didn't require it and was happy if I paid for the occassional tank of diesel myself.
HMRC required me to prove two years of business travel. Eventually we managed it but it took +/-12 months to get them off our back and cost Lord knows how much.
So by all means go ahead and fiddle your VAT. Keep in mind if HMRC come calling and find errors or fiddles they will dig and dig and dig. They can go back seven years and your records had better be perfect to withstand that.
Your other partners will probably be delighted.
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Pale Rider
Legendary Member
My accountant told me a tale of one of his customers who was questioned over a hotel bill.
The VAT man spotted it contained a morning newspaper, which should be zero rated.
What the VAT man never knew was the bill itself was to attend a wedding.
So in that case the VAT man won a little and lost a lot.
The VAT man spotted it contained a morning newspaper, which should be zero rated.
What the VAT man never knew was the bill itself was to attend a wedding.
So in that case the VAT man won a little and lost a lot.
Pale Rider
Legendary Member
I'm impressed, nay humbled, at the height of the moral ground occupied by some contributors to this thread.
vickster
Legendary Member
Not sure why, even the use of 'creative accounting' thread title implies that the OP knows what he is suggesting is not exactly cricket. That term does not have positive connotations.
Does say he's not looking to defraud however so...He could simply ask others involved in the business and his accountant what he is able to do.
Other than just buy a new bike out of his own money (at a discounted price or negotiating a discount)
(presumably the move to the new position of partner is a promotion with more money).He could turn perhaps down the promotion and stick with C2W
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Pale Rider
Legendary Member
Agreed, one person's tax avoidance is another's prudent tax planning.
vickster
Legendary Member
It's fine if it's done within the rules, an accountant can advise
Maybe he'll need to engage one if moving from paye to self assessment once a partner?
