Selling Classic Cars?

[Ph0en1x_uk]

Hi all,

I run a Limited Company manufacturing obsolete components for Classic Cars.

I have often considered what the business implications are of a Limited Company restoring/selling classic cars to the public.

Assuming I purchase a project vehicle and do nothing to it and sell it as such. Is this acceptable? I presume the accounting is the same? I presume I would need to register as a vehicle trader?

Then there is the issue of selling a restored vehicle and warranty..

Can anyone shed some light on what I need do from a legal and accounting point of view as this is completely new to me.

Regards

James

 

[kelvin1950]

As a private individual you're allowed to sell a small (6?) number of cars a year without it being deemed that you're a motor trader. The accounting is done using the VAT margin scheme.

 

[Ph0en1x_uk]

Hi,

Thanks for this. Where would I find the official documentation stating the value of 6?
Also, are you suggesting that I myself could sell 6 a year. OR that the business could sell 6 a year without being deemed a motor tradr. OR both?

My business is not VAT registered, so how does this effect things?

Regards

James

 

[kelvin1950]

Many years ago the Inland Revenue used to consider selling more than 4 cars in a year as trading. Their point being that buying a single car and selling it at a profit was not worth worrying about I guess. They used to check the telephone numbers of car adverts in the local press. If they suspected you were trading they would check you out. Then you be asked directly about other income and would expect full details of cars bought, any repairs and selling expense. Then you would get a bill for the income tax due. I worked with a couple of guys who did this and got caught. I guess that won't apply if you're selling them as part of your business though.
If you're not VAT registered then you don't need to worry about that yet. It may well be that doing this pushes you over the threshold though.

 

[fisicx]

As a classic car owner, your best bet is to ask the questions on the various classic car forums and sites like pistonheads. You can also write to magazines like Practical Classics as they like these sorts of questions. They seem to buy and sell cars all the time.

 

[Chris Ashdown]

Are you talking about runners, you would need trade plates at least to let them drive it or non runners no trade plates required

You can buy 3 or 6 month guarantees but don't know about classics so probably sold as seen

 

[14Steve14]

If you are rebuilding and selling cars then you will need a traders policy for you and your employees, and also cover for any customer test drives. You will need trade plates as already mentioned. You will need good liability cover insurance probably from a specialist in the motor trade. You will need to find a reputable warranty company who offers policies to customers on top of their usual legal rights. Vat has already been mentioned. You will also need proper premises, and a lot of workshop equipment and specialist tools. A quick look in the classic car magazines will find you all the specialist services that you need and many will do private and commercial work for things like axle, gearbox and engine rebuilds.

I cant think of a lot else, but there are loads of restoration companies doing this sort of thing, so it cannot be that hard to sort out. As long as you do the restoration properly and do not cut corners you should be fine. The hardest thing to do will be to convince customers that you know what you are doing until you get a good reputation for high quality restorations.

Good luck in your possible venture.