IT Contractor\'s - VAT registered?
 

I was at a dealer at the weekend and they suggested it possible to claim the Vat on bikes? Has anyone any experience or guidance?

You can, if it's a company vehicle.... but you'll be hammered in tax for that reason. And as and when you come to sell it the money raised is the companies not yours I would assume.

Several years ago I asked my accountant about a company car purchased via the business, he basically said unless I buy a large capacity motor do around 60k+ per year it won't be cost effective, so I doubt a bike would be any different to be honest

Well .... if you are VAT registered then you can claim "reasonable business expenses" and VAT back on such items. You'd have to be able to show that the bike was for "business use" though! It would also have to be owned by "the company", I think, and then of course you would fall foul of the "company vehicle" tax rules.

Is it really worth it I wonder?

(Edited to say) As Flanks says in fact!

[Edited on 31-10-2005 by HW]

If you are VAT registered, and register the bike in the company's name you can offset the VAT no problems, but there seems to be some varying opinions on what happens when you sell the bike.

My bloke said that the VAT on the sale price of the bike had to be paid back when the company disposes of the bike, so you only save the difference between the price you buy the bike at and the price you sell it for.
However, The other advantage is that you also save VAT on all servicing costs , and the servicing comes from your gross not net income, the downside is the taxable benefit of the bike is much higher than it was 10 years ago (when it was a bit like a van, almost a "freebie"). You have to declare how much the servicing is costing you... Its like everything, it tends to be a bit of a "swings and roundabouts" thing. The bike also has to be registered in the company name, which can have insurance implications (most ask "is the bike registered in your name") I got around this by having the dealer register the bike with my name in front of the company name.

It seemed to save me a lot of money when I first bought a bike in the company name, but by the time it was 5 years old, I was begining to wonder. Best thing to do is ask your accountant to look at the implications in your exact circumstances (or, if you're brave enough to do your own accounts, best wait until someone who knows more about it than me replies!)

"My bloke said that the VAT on the sale price of the bike had to be paid back when the company disposes of the bike, so you only save the difference between the price you buy the bike at and the price you sell it for."
thanks for the info, what if I then sold it to someone for, say, 1 pound?
I'm talking about a 3 grand bike anyway so it isn't really going to save me that much. I'll mail the accountant and see what's what.

aaaaahhh, the old: "but I only sold it for a pittance" trick.
Won't wash with Mr Vatman I'm afraid. bin there, done that, paid the fine.

Bit like divorce settlements - sell the house for a fiver to your mate and give her half of the proceeds - i.e. £2.50.
Court takes a dim view and says "So, by paying your ex promptly with the £2.50 you agree that you do owe her half of your worldly goods" oops.:(

I don't think you will be able to claim 100% of what ever you clam anyhow.
I would have thought that they would have duducted some for personal use?

I seem to recall @ 4 years ago there was not any tax liability on a comapny motorcycle?

Not sure if this has changed along with 'crew cabs' now attracting full vehicle tax as opposed to the std. £500 for a van?

Sure the tax man will get you one way or another.


:flame::mad:

Surely if you buy it new!
claim the VAT on purchase price

Run it for 4 yrs !

Rite it back at 20% per year over 4 years

then sell it out of the company for the remaining 20% to your wife and then pay the vat on the difference !!!!!!!

:eureka:

[Edited on 31-10-2005 by madmav]

[quote]Originally posted by DaveB916
I seem to recall @ 4 years ago there was not any tax liability on a comapny motorcycle?

Not sure if this has changed along with 'crew cabs' now attracting full vehicle tax as opposed to the std. £500 for a van?

Sure the tax man will get you one way or another.


:flame::mad: [/quote

Yeah, its definitely changed...when I bought my bike on the company in early 2000, the tax liability was minimal, but for the last couple of years, I was paying tax on the value of the bike, tax on the value of the servicing, and over a 5 year ownership, I reckon I might as well have paid the VAT in the first place. I have heard other accountants say that you don't have to pay the VAT when you dispose of the bike, but mine was adamant that you do, and you don't want to fcuk with the VAT man! If the bike is only £3,000 , I'm assuming its second hand, so will probably not depreciate too much, so you probably wouldn't gain too much once you eventually sell it on....every case is different, but I reckon that with things as they are, you wouldn't save much

I tell my clients not to bother. Yes you reclaim the VAT. You then get hammered twice:

1. You have to pay back VAT on a notional benefit in kind quarterly, and

2. The tax man gets a benefit in kind (along with 12.8% employers NI contribution).

You won't win! Not sure what would happen when you sell. Only VAT is charged on commercial vehicles so would think no charge.

It wouldn't surprise me if you didn't have to pay the VAT when you sell the bike...I always had a sneaking suspicion that my accountant was working for HM Customs and Excise and not me ! :mad:

Shouldn't do as it would come under the second hand goods scheme. You would only then pay VAT on the profit margin.