Buy/sell car

[Vanequiche]

Hi,

I am the sole director of small consulting company, not VAT registered. I have the opportunity to buy a used car at a very good price and resell it at a profit. Can I do that through my company (which is cash rich, I am not ;)) ? How can I make sure it will not be considered as a company car (and avoid the corresponding benefit in kind) ?

Thanks !

[fathippy]

why would you want to do it through the company? why not just borrow the money from the company, and repay it when the deal goes through. That solves all the complications for the company since car-dealing is not really part of a consultancy business. Plus you could also perhaps justify that on a personal level it was a one-off, ie you bought the car to use and then didnt like it and sold it on. Unethical perhaps, but I dont know anyone that has been accused of "trading" when doing something just the once.

[elainec100@cheapaccounting]

Take a dividend from the company, buy car personally and sell it - keep it simple.

[Vanequiche]

Thanks, tought about a dividend of course but would rather avoid taking cash out of the company for the moment (which is why I was asking if the company could do it)...

[oldeagleeye]

BANKERS DRAFT and put it down as a directors loan.

[Carboy]

If you want to make a quick proffit on the car let me know .

Also if you would like an idea on valuation same applies :)

[MyAccountantOnline]

Hi,

I am the sole director of small consulting company, not VAT registered. I have the opportunity to buy a used car at a very good price and resell it at a profit. Can I do that through my company (which is cash rich, I am not ;)) ? How can I make sure it will not be considered as a company car (and avoid the corresponding benefit in kind) ?

Thanks !

What sort of figures are involved, and does the company owe you any money at present (ie is their a directors loan on the balance sheet)?

[Vanequiche]

Company has GBP 100k of cash available, car is GBP 28k approx, no directors loan....

[elainec100@cheapaccounting]

Have a look at this regarding loans to directors:

http://www.accountingweb.co.uk/item/177269

[Pad]

Hi,

Personally, I would be more concerned about all manner of other things than where the money is coming from if you are buying and then selling a car of this value for profit.

First, if you wish to pass it on without your name on th V5 docs, then you are effectively passing it off as a trader which means you are bound by the Sale of Goods Act. For a car of that value, buyers will have significant grounds for comeback should anything go wrong with it within 6 months of buying it and I suspect it wont be cheap to put right.

If you are prepared to buy it privately, you will have to update the DVLA on the V5 and actually own it for a couple of months whilst you wait for the documentation. Which means insurance, road tax, liability if it goes wrong etc.

Finally, whether it you do it as trade or private, you will be targetting a very small market - there are very few people that are prepared to pay upwards of £30K for a car from anyone other than an established and trusted dealer. There will be even less who want to buy one from someone who is just passing it on/owned it for a short period.

Unless the potential earnings are in the region of five figures (which would probably mean it is an exotic that someone needs to dispose of quickly, Continental/456/DB7 or similar) and you are willing to take a huge risk, I would recommend leaving it well alone.

I hope this is of some use to you.

Pad (car trader).