One of the Directors I work for is contemplating leasing a car and wants to put the cost of the car through the business, but intends to reimburse the company for the cost of the vehicle (i.e. net plus 50% VAT) by taking a reduced dividend at the end of the year. I'm trying to establish whether this would be seen by HMRC as a benefit as he is in fact repaying the cost to the company. The Director wants to save himself 50% of the VAT and obviously CT by showing lower profits at the end of the year. Hmmmm..... Tried ringing the HMRC helpline but all I get is a message saying they're busy, try later and then am cut off. Lovely! Any thoughts gratefully received.
I don't think this work. If the paperwork is in the company name I would think it would be a company car, though reimbusring the cost may be reduce the bik (not sure though), but it is clearly a way of manipulating things and if he is not repaying teh full vat then it is not a personal car I would think. I don't see the profits and therefore the CT being reduced if he is repaying the 'loan' and it is not being repaid by having a reduced dividend, he would have to take the dividend and then repay from that. can he even take a reduced dividend? Is he the only shareholder? This is riddled with problems and hmrc would be the last people I would call for advice on this one!!
