Reply to: tax efficient commercial vehicle (van) purchase?

[John Lane]

Incidentally, you might like to read this article which includes inter alia:

Thus for a vehicle to be classed as a van it must have a purpose other than for carrying passengers. It should therefore have a significant load bay to carry goods such that the carrying of passengers can no longer be the main purpose. A car boot will not count.

And that load bay must not have windows either. So the cavernous rear of Lovejoy’s Volvo Estate, with the seats permanently folded down and habitually filled to the roof-lining with antiques, would not be enough to make it a van, even if the rear seats were removed.

Thank you - useful - why should I be surprised that the HMRC definition is different from the DVLA definition!

[northernladuk]

I currently have converted 2 vehicles to motor-home myself - so understand that a 'van with windows' can still be classified as a van - I'ts a choice to apply to change the vehicle classification... usually to achieve cheaper insurance.

Incorrectly classifying a vehicle to achieve cheaper insurance isn't a choice, it's fraud surely? And to do the same to HMRC is evasion?

You are clearly wanting it to be a commercial vehicle for one reason and use it as a motor home for another. You can't have your cake and eat it.

Just for the amusement why don't you sidestep your stance on what your accountant does for you and just see what he thinks of this.... but you know that already don't you.

[malvolio]

Incidentally, you might like to read this article which includes inter alia:

Thus for a vehicle to be classed as a van it must have a purpose other than for carrying passengers. It should therefore have a significant load bay to carry goods such that the carrying of passengers can no longer be the main purpose. A car boot will not count.

And that load bay must not have windows either. So the cavernous rear of Lovejoy’s Volvo Estate, with the seats permanently folded down and habitually filled to the roof-lining with antiques, would not be enough to make it a van, even if the rear seats were removed.

[malvolio]

I currently have converted 2 vehicles to motorhome myself - so understand that a 'van with windows' can still be classified as a van - I'ts a choice to apply to change the vehicle classification... usually to achieve cheaper insurance.

I'm attracted to some contract roles that are working away from home, but changes to expenses rules mean that the cost of accommodation is a factor - I would consider using campsites at around £12-25 a night instead of cheap hotels at £50 plus per night.

The time when I stop working/close company/retire is a 'movable feast' of 2-8 years.

I appreciate the negative views expressed - I wanted to understand the mechanics of what I was thinking about - moral decisions I feel I can take myself after more than 40 years 'employed/tax paying' so far.

If I receive some personal benefit after I finish working/contracting... that is within the current ruleset?

John

TBH my gripe is not about converting vans to accommodation - although if camping rather than hotels is your thing, which I totally agree with incidentally, why haven't you already got a usable campervan/motorhome...?

No, the point is people using the company as a way to avoid personal taxation and/or expenditure. That is why we have IR35 and a host of other pettifogging rules and complexities to deal with. The company is there to capture your gross income efficiently, protect you against various liabilities and smooth your variable income so you can do some financial planning and pay the bills on time. It's not a money tree, not is it your income.

Once the company is gone and you have all the money you can legally extract from it, what other "personal benefits" do you think might apply? I can't think of any.

[John Lane]

Are any of the comments close to the true reason for your purchase?

I currently have converted 2 vehicles to motorhome myself - so understand that a 'van with windows' can still be classified as a van - I'ts a choice to apply to change the vehicle classification... usually to achieve cheaper insurance.

I'm attracted to some contract roles that are working away from home, but changes to expenses rules mean that the cost of accommodation is a factor - I would consider using campsites at around £12-25 a night instead of cheap hotels at £50 plus per night.

The time when I stop working/close company/retire is a 'movable feast' of 2-8 years.

I appreciate the negative views expressed - I wanted to understand the mechanics of what I was thinking about - moral decisions I feel I can take myself after more than 40 years 'employed/tax paying' so far.

If I receive some personal benefit after I finish working/contracting... that is within the current ruleset?

John

[WTFH]

Thank you for the range of views received and food for thought.

John

Are any of the comments close to the true reason for your purchase?

[John Lane]

Thank you for the range of views received and food for thought.

John

[WTFH]

Why not buy a motorhome and only use it for business. More expensive than a van, so more VAT to claim back. Then when you sell it to yourself next year for 1/4 the price, you'll have saved even more.*


*Please note, I am not an accountant, neither am I a doctor. If I need medical help, I go to my doctor, not try to diagnose my illness on the internet. If I need financial help, I go to my accountant.

[northernladuk]

Becomes a little clearer why he's not bothering with his accountant now

[Maslins]

Partial windows - buying a panel van and putting windows in the van so that when you put seats in the back you can look out.

Ply lining - using plywood (make sure it's the right kind!) to board out the van to make a smoother base / side for fixing the rock-n-roll bed to, and the cupboards etc.

So not something that your average contracting business would really need at all, but your campervan would like to have.

Yup, that final para was my suspicion too. Sorry John, I think you're really pushing your luck with this idea. It does sound like if there will be any business usage it'd be a bit of a sham, and the real plan is to get tax relief on a personal motorhome.

[malvolio]

Partial windows - buying a panel van and putting windows in the van so that when you put seats in the back you can look out.

Ply lining - using plywood (make sure it's the right kind!) to board out the van to make a smoother base / side for fixing the rock-n-roll bed to, and the cupboards etc.

So not something that your average contracting business would really need at all, but your campervan would like to have.

Putting windows in a van stops it being a van... go look up the definition of a commercial vehicle. Also, unless you leave it at your workplace - that is, not at home - then you don't get the BIK exemption since there is an element of personal use when you drive it home at the end of the day.

Buy the van through the company. Sell it to yourself at market value when the time comes. Until then, keep it as a van. Or stop trying to fleece us and the taxman and buy a proper campervan...

[TheFaQQer]

I wish to purchase a new van for business use.

My T4 camper is on eBay for £8995 if you're interested

(Actually the listing ran out last night, but it's still for sale)

[TheFaQQer]

Re the accessories, I don't know what "partial windows" or "ply lining" are, but especially the latter makes it sound like this is basically you trying to get tax relief on half the costs of converting it into your motorhome.

Partial windows - buying a panel van and putting windows in the van so that when you put seats in the back you can look out.

Ply lining - using plywood (make sure it's the right kind!) to board out the van to make a smoother base / side for fixing the rock-n-roll bed to, and the cupboards etc.

So not something that your average contracting business would really need at all, but your campervan would like to have.

[TheFaQQer]

New van purchased including vat £25K - reclaim vat of £5K - all through company bank account.

What rate of VAT are you paying on the van to recover £5k on a £25k bill?

[Maslins]

Perhaps you can understand reluctance of some accountants to comment here. They may well charge higher than your current accountant, but that's because they/their staff have lots of qualifications/experience so they can answer these kinds of questions. Cheeky to pay a cheap as chips accountants who can just do processing then expect others to answer your queries for free.

My initial thoughts - why do you need a van for contracting? Do you have a lot of kit you need to take with you to clients? If not, seems to me the whole thing is a bit of a sham to try to get tax relief on your future motorhome.

If you're happy you can justify you need a van, then the first half of your statements are fine. Re the accessories, I don't know what "partial windows" or "ply lining" are, but especially the latter makes it sound like this is basically you trying to get tax relief on half the costs of converting it into your motorhome. Unless you need those for business usage, I wouldn't claim them.

Depreciation is then largely irrelevant. If in 2 years you come to sell the van to yourself, then the company should sell it at fair market value (which I'd guess for a 2 year old van with probably modest mileage will be more than 33% of its original cost). That amount will be taxable within the company (though basically just meaning you only end up getting tax relief on the reduction in value of the van whilst you own it).