I can't get my head round this one, it's simple enough, I just need confirmation of the answer.
My client has told me he has given one of his computers to the company, for no charge. What would the accounting entries be please and at what amount, MV or cost?
My client has done this because a new employee did not want to use it.
The company has paid for a new computer for the employee. However, this is just a loan, the employee is paying back £x amount per month, at the end of the loan period, the computer is his.
The loan is for the net amount of the purchase only.
I think my client thinks that because he has 'donated' a computer to the company, the company can claim back the VAT on a computer bought by a loan to the employee.
Am I right in thinking these are two completly separate transactions and the company can not re-claim the VAT on a computer the employee will eventually own, no matter how many other computers he 'donates'.
Looking at your questions you should really get your client to contact their accountant as there will be tax issues surrounding the transactions you mention.
The computer he gave to the company he could sell to the company for a market value. He receives the cash tax free and the company can claim capital allowances on the purchase.
With regards to the computer and loan. You will need to be careful about a benefit in kind charge and you will need further advice before completing the transaction.
