Reply to: WeBuyAnyVan - Good for valuation when buying company van personally?

[Old Greg]

With Parkers you have to pay extras including condition reports and they aren't making a formal offer to purchase the vehicle. With WBAV at least you can say they are willing to purchase the van (albeit at a rock bottom price).

It's about a fiver to get mileage and condition taken into consideration. Save the valuation to PDF. HMRC aren't going to quibble.

[eek]

...or using Parkers.

With Parkers you have to pay extras including condition reports and they aren't making a formal offer to purchase the vehicle. With WBAV at least you can say they are willing to purchase the van (albeit at a rock bottom price).

[Old Greg]

However if you know their business model it's perfectly possible to argue that it's not the correct value - which is why I would suggest using it as a guide and then paying a £x00 more to just cover your backside - remember my point is could you stand up in court and argue the point with a straight face.

...or using Parkers.

[eek]

No. I just reckon that WBAV valuations are a perfectly valid way to guage the value of a low value asset that is subject to large amounts of variation and depreciation.

However if you know their business model it's perfectly possible to argue that it's not the correct value - which is why I would suggest using it as a guide and then paying a £x00 more to just cover your backside - remember my point is could you stand up in court and argue the point with a straight face.

[Old Greg]

No. I just reckon that WBAV valuations are a perfectly valid way to guage the below market value of a 10k asset that is subject to large amounts of variation and depreciation.

FTFY

[Lance]

You've clearly no idea and just love to disagree with everyone. Are you NLUK's lovechild?

Go back to my first post and read it this time. It says "If (in bold) HMRC investigate" selling a company asset especially to yourself is a red flag to them.

That doesnt mean they will clobber the person there and then but it will make them look very closely at the transaction and others. How many other company assets have been sold to the individual below book, who knows but they'll look all the same?

But hey, whatever floats yer boat.

No. I just reckon that WBAV valuations are a perfectly valid way to guage the value of a low value asset that is subject to large amounts of variation and depreciation.

[TheDogsNads]

I disagree.
Any item has a sale price to the trade and a sale price to the public. Both are fair valuations.
There is nothing in fair market that says you have to use the price to the public rather than the price to the trade. We don't live in a society where the government sets the price.

HMRC will be interested if you sell a £50k car to yourself for £5k. Not if you sell a van that's top book price might be £9,000 to yourself for the bottom book price of £7,000. Especially as that in three years time, when they are looking, the book price will be more like £2,000 and the state of the vehicle is unknown.

Find me the HMRC article that says fair valuation has to be made as retail price rather than trade.
Both are fair.

who's to say?

I have just bought the wife a new car. I looked at 10 different cars, all the same make/model, same engine, same age, all retail price, with a £1,500 variance. That difference was based on mileage and condition. One objective, and one subjective measure. Are you saying that OP must use the highest price? I'm saying the OP can use the lowest they can justify, ie. a formal, written price.

"the amount that the employee could get for the item if he or she were to dispose of it as soon as it came into their possession. That is, its second-handvalue" that you highlighted.

Selling a car for the value that you get on Parkers requires you to advertise it and sell it. I've tried that before. It's not that easy.
The key bit here is the "employee could get" bit...... If the OP isn't a car salesman, the Parkers valuation is pretty optimistic... Whereas the WBAV price is something they'll give you if it's in good nick when you take it.


I too should be doing real work, but arguing on here is less dull.

You've clearly no idea and just love to disagree with everyone. Are you NLUK's lovechild?

Go back to my first post and read it this time. It says "If (in bold) HMRC investigate" selling a company asset especially to yourself is a red flag to them.

That doesnt mean they will clobber the person there and then but it will make them look very closely at the transaction and others. How many other company assets have been sold to the individual below book, who knows but they'll look all the same?

But hey, whatever floats yer boat.

[Lance]

I must stop trying to avoid writing a very dull work document. But...

EIM21645 - Employment Income Manual - HMRC internal manual - GOV.UK



EIM00540 - Employment Income Manual - HMRC internal manual - GOV.UK



I reckon that the most reasonable and defensible way to calculate the amount that the employee could get for the van is the Parkers private sale van price. Others may differ.

"the amount that the employee could get for the item if he or she were to dispose of it as soon as it came into their possession. That is, its second-handvalue" that you highlighted.

Selling a car for the value that you get on Parkers requires you to advertise it and sell it. I've tried that before. It's not that easy.
The key bit here is the "employee could get" bit...... If the OP isn't a car salesman, the Parkers valuation is pretty optimistic... Whereas the WBAV price is something they'll give you if it's in good nick when you take it.


I too should be doing real work, but arguing on here is less dull.

[Old Greg]

I must stop trying to avoid writing a very dull work document. But...

EIM21645 - Employment Income Manual - HMRC internal manual - GOV.UK

Particular benefits: assets transferred to a director or employee: when the special rules applySections 203 and 205 ITEPA 2003
The general ‘money’s worth’ rule (see EIM00530) for charging the benefit of an asset transferred is supplemented by special rules.


The special rules for determining the chargeable benefit apply in any of the following three situations:


where the person who transfers the asset does so before it has been depreciated or been used (see EIM21646), or
where the asset transferred has depreciated or been used before its transfer (see EIM21655), or
where the asset transferred is not a car or living accommodation but has previously been available for the use of someone who has been chargeable on the benefit of it under Section 205(3) ITEPA 2003 as in EIM21630 and EIM21650.
In all three situations the amount chargeable will be:


the greater of:


the second-hand value of the asset in the hands of the employee if it is chargeable under Section 62 ITEPA 2003 less the amount the employee has to pay for it (see EIM00540 onwards) or
the amount calculated in accordance with the special rules at EIM21646, EIM21650, and EIM21655 less any amount made good (see EIM21120).
But if a voucher or credit-token is used to get the asset, the only charge will arise under the vouchers and credit-token legislation (see EIM16000).

EIM00540 - Employment Income Manual - HMRC internal manual - GOV.UK

Employment income: money's worth: benefits capable of being turned into moneySection 62(3) ITEPA 2003
Things of direct monetary value to the employee
A cheque is not money but it can readily be converted into money by the employee at the amount for which it is made out. It is money’s worth (see EIM00530). So for all practical purposes a cheque payment can be treated as a money payment. The same goes for National Savings Certificates. Both can be cashed by the employee at face value and that is the amount that is treated as earnings by Section 62(3) ITEPA 2003.


Things that are capable of being converted into money
But an employer may give an employee something that is not capable of being turned into money at face value. In that case, the amount that is treated as earnings under Section 62(3)(b) ITEPA 2003 is the amount that the employee could get for the item if he or she were to dispose of it as soon as it came into their possession. That is, its second-handvalue (see example EIM00550).


[There is an exception to this rule. That is where a benefit is obtained by means of a voucher or credit token. Then the chargeable amount is the cost of providing the voucher or token and the money, goods or services for which it is capable of being exchanged (see EIM16010 onwards).]


Sometimes, the employee pays the employer for the item he or she has received. If the amount paid is equal to or greater than the value of the item there is no tax charge on the employee. But if the amount paid is less than the second-hand value of the item in question the difference is taxed as earnings under Section 62 (see example EIM00560).


As regards the transfer of land and houses to employees see EIM08001.

I reckon that the most reasonable and defensible way to calculate the amount that the employee could get for the van is the Parkers private sale van price. Others may differ.

[Old Greg]

who's to say?

I have just bought the wife a new car. I looked at 10 different cars, all the same make/model, same engine, same age, all retail price, with a £1,500 variance. That difference was based on mileage and condition. One objective, and one subjective measure. Are you saying that OP must use the highest price? I'm saying the OP can use the lowest they can justify, ie. a formal, written price.

I'm saying the most reasonable and defensible thing to do is to use a Parkers valuation, which will take variables such as mileage into consideration. If you would do something else, that's fine.

[Lance]

Hang on just one cotton-pickin' moment. The private price is the lower price in this instance. It is what the individual would have paid if buying from a private seller rather than from a dealer (which seems sensible because your Ltd is not a dealer so you wouldn't expect to pay dealer prices).

Surely the most reasonable and most defensible way of calculating is via Parkers.

who's to say?

I have just bought the wife a new car. I looked at 10 different cars, all the same make/model, same engine, same age, all retail price, with a £1,500 variance. That difference was based on mileage and condition. One objective, and one subjective measure. Are you saying that OP must use the highest price? I'm saying the OP can use the lowest they can justify, ie. a formal, written price.

[Old Greg]

Find me the HMRC article that says fair valuation has to be made as retail price rather than trade.
Both are fair.

Hang on just one cotton-pickin' moment. The private price is the lower price in this instance. It is what the individual would have paid if buying from a private seller rather than from a dealer (which seems sensible because your Ltd is not a dealer so you wouldn't expect to pay dealer prices).

Surely the most reasonable and most defensible way of calculating is via Parkers.

[Lance]

Or enter the reg here Van & pickup valuations | Van & pickup used prices | Parkers and use the private price (not the dealer price).

Find me the HMRC article that says fair valuation has to be made as retail price rather than trade.
Both are fair.

[Old Greg]

If it was a car, the logic would probably go take the lowest sane matching car on autotrader and use that as the price for the sale.

If you are planning to use the bottom scraping sites (as is the case with WBAC/V which is BCA sourcing cars from private sellers) I would take their price, add 8-10% on top and use that as a guide. It's virtually a paper transaction anyway bar tax so just use a valuation you think you could justify in court.

Or enter the reg here Van & pickup valuations | Van & pickup used prices | Parkers and use the private price (not the dealer price).

[eek]

BIK is about whether the employee or Director has benefited personally. Buying it cheaper than you could buy it elsewhere is a benefit. So the correct value to use is the value of selling it to a member of the public. Essentially, you're saying that you will get away with it as HMRC won't be bothered. You may be right and that's a valid viewpoint, but the benefit still exists IMO. I guess we all take the approach that we're most comfortable with (for whatever reason)/

If it was a car, the logic would probably go take the lowest sane matching car on autotrader and use that as the price for the sale.

If you are planning to use the bottom scraping sites (as is the case with WBAC/V which is BCA sourcing cars from private sellers) I would take their price, add 8-10% on top and use that as a guide. It's virtually a paper transaction anyway bar tax so just use a valuation you think you could justify in court.