Is a cherished plate an investment for an LTD?

[northernladuk]

Having a discussion with a contractor and I can't see where he is going wrong in the situation below but it just can't seem right.

2 Cars. Fun car and workhorse car. Workhorse is a company vehicle. He has standard LTD set up.

Now he believes that cherished plates are considered and investment so has bought a 4 character plate which I reckon is in the 5 - 7k mark throught the company.

Now he has put this on his fun car as in his mind it makes no difference if it is on the car or on paper. His plan is to keep it until the company folds and then sell it to himself/someone at lower price so actually showing a loss on the item and he gets to keep the plate.

Apart from the last bit about selling to himself at a loss which sounds a tad dodgy he is adamant his plan is fool proof. Where does it fall down? I guess a good plate could be classed as an investment as it is rare and old? Surely there is a twist somewere?

[DaveB]

Having a discussion with a contractor and I can't see where he is going wrong in the situation below but it just can't seem right.

2 Cars. Fun car and workhorse car. Workhorse is a company vehicle. He has standard LTD set up.

Now he believes that cherished plates are considered and investment so has bought a 4 character plate which I reckon is in the 5 - 7k mark throught the company.

Now he has put this on his fun car as in his mind it makes no difference if it is on the car or on paper. His plan is to keep it until the company folds and then sell it to himself/someone at lower price so actually showing a loss on the item and he gets to keep the plate.

Apart from the last bit about selling to himself at a loss which sounds a tad dodgy he is adamant his plan is fool proof. Where does it fall down? I guess a good plate could be classed as an investment as it is rare and old? Surely there is a twist somewere?

If he paid for it through the company and then used it on his personal car registered in his name then he could end up liable for tax and NI on the value of the plate. HMRC could consider it a disguised payment in the same way they went after all the city traders who used to get their bonuses in bullion or diamonds to avoid income tax on the cash.

[Clare@InTouch]

Personal use of company assets would generate a benefit in kind.

Selling an asset to yourself at less than market value would generate a tax charge on the difference - if tax evasion were that simple, everyone would be doing it!

[THEPUMA]

Personal use of company assets would generate a benefit in kind.

Selling an asset to yourself at less than market value would generate a tax charge on the difference - if tax evasion were that simple, everyone would be doing it!

A personalised number plate doesn't give rise to a benefit-in-kind if it remains owned by the company. Selling it to an employee at undervalue would, naturally, generate a tax charge.

PUMA

[kaiser78]

Cherished plates ? Tacky and chavvy.

[moorfield]

A personalised number plate doesn't give rise to a benefit-in-kind if it remains owned by the company.

PUMA

I think it does, if it's used by the employee - unless that use is "wholly and exclusively" for business purposes, which, frankly, it isn't is it? - and I'm guessing that the number bods (correct me if I'm wrong number bods) would apply a usage benefit of 20% * orignal value just like they would other assets owned by the company.

Nothing wrong with the company owning the plate but (i) the employee may be liable to a benefit and (ii) the company may be liable to a capital gain if/when it sells it on.

Also the car as a comany vehicle it will be incurring a benefit for private use based on it's emissions rating and list price, and possibly a fuel benefit too if the company is paying for that.

I think this guy is trying to be too clever, another example of a silly expense claim, and another person in front of me in the "Look at me Hector, I'm not dodgy, honest" queue.

[THEPUMA]

I think it does, if it's used by the employee - unless that use is "wholly and exclusively" for business purposes, which, frankly, it isn't is it? - and I'm guessing that the number bods (correct me if I'm wrong number bods) would apply a usage benefit of 20% * orignal value just like they would other assets owned by the company.

Nothing wrong with the company owning the plate but (i) the employee may be liable to a benefit and (ii) the company may be liable to a capital gain if/when it sells it on.

I think this guy is trying to be too clever, another example of a silly expense claim and another person in front of me in the "Look at me Hector, I'm not dodgy, honest" queue.

Nope - see Car benefits: accessories - personalised car number plates

It's one of those anomalies you learn about at tax school!

PUMA

[moorfield]

Nope - see Car benefits: accessories - personalised car number plates

Yes granted, but that seems to apply to company cars. The OP (or his "mate") is using it on his private car not his company car - if I've not misunderstood - that's where the problem may be IMO.

There is no bar to assessing a benefit if the employer pays for the re-registration of the director's own car.

We need a number bod to sort this one out .... Interesting question though.

[THEPUMA]

Sorry you're quite right. I missed that point in the OP. I agree if it is held on a non-company car the BIK is the standard 20% per annum asset rule.

(I am a number bod BTW!)

PUMA

[moorfield]

(I am a number bod BTW!)

Good to know! I'm not, but I sat the AAT Personal Tax exam last week, so this stuff is still floating around in my head!