i have a client who wants to buy a van for sole use for her cleaning business (no personal use) , she is a sole trader. Can she claim it back as capital expenditure and if so is it the full amount? Been a long time since I dealt with this sort of thing for sole traders.
Also she is using a loan from a family member to fund the purchase with no interest. Are there any tax implications?
Approximately how much money are we talking about for the loan?
At initiial read it sounds like an informal family arrangement which I would treat as a loan to the business owner and nothing to do with the business itself (don't enter in the books) but then treat the money introduced by the owner as a capital injection. So, the business owes money to the owner. The owner owes money to their relative. Rather than the business owing money to the relative.
Tell your client to ensure that there is paper trail proof available as to where the money came from otherwise an HMRC investigation may identify it as undeclared income.
HTH.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Sounds a reasonably low amount (I take £6k as being the cut over to more official arrangements as that ties in with inheritance tax maximum double year gifting (not that its anything to do with inheritence tax in this instance, just my ballpark figure that I use)). I would go with my suggested approach of making the loan personal, ensuring that there's a paper trail and introducing the capital as though introduced by the owner so divorcing the money from its origins as far as the business is concerned.
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
