A client is a director of his company. There are no employees so he has no PAYE scheme and he doesn't take a salary, just dividends. He has just decided that his new car should be a company car. He does very little business mileage. I think the idea is to claim back half the VAT on the car. I do not have any clients with company cars yet so this is a first for me. It doesn't seem like a good idea to me given the tax on the car. Can anyone give me any idea of what he needs to do eg register the fact he has a car with HMRC? Does he need a PAYE scheme for that or not? Is there a website somewhere where I can work out whether the VAT he is saving is more than the tax he'll have to pay. I think he will pay for the fuel himself. When I'm doing the bookkeeping, do I only include 50% of the VAT on the invoice in the accounts so that the VAT return is calculated correctly? Completely at sea here and trying to get everything done before Christmas so any help would be much appreciated.
I dont like to bring bad news, but if there is any private use of the car, you can not claim the VAT on the car.
Also the provision of a BIK will mean that you need to run a PAYE scheme. So whilst it is more work for you, it will be more costs for the employer.
Finally, you either claim the VAT on fuel or you dont, you cant just say 50%, especially when you say that there is little business mileage. You can claim the VAT if you pay a scale charge however.
Kind regards
Nick
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
