Hello, my friend is a car mechanic and he has limited company. He would like to start buying cars to repair and sell them. Now would he account for the cars as company's purchases (eg. for £7k)? How would he go around tax registration, car tax and insurance? His company's registration address is his accountant's address, but the accountant doesn't agree to register the cars under their address. What would be the best solution for this situation please? he cannot use a PO Box to register a car. Thank you
Hi Ellie
We cannot give such advice on this site. Your friend will need to get some proper advise from his Accountant as that is what they are there for.
He cannot run a limited business of this kind via a PO box. He must have some kind of trading address - where is that? Why would he not want to use his business address?
If he is buying, repairing and selling the cars, without driving them personally, only allowing test drives then there are very specific rules around car tax and registration which he needs to follow, which is not the way that members of the public owning a car needs to follow. He needs specialist traders insurance to allow for test drives, public liability ETC and also trade plates, amongst other things.
Also - he needs to be aware of the specialist VAT schemes available for second hand cars, part exchanges, scrappage of vehicles etc. He needs to take great care of the records he is keeping, there are very specific rules to follow.
As I say, the Accountant should be able to assist him with it.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
thank you for that. It looks like he needs to look for a different accountant then as the current one didn't even mention anything that you did. I will let him know what to look for. Thank you
thank you for that. It looks like he needs to look for a different accountant then as the current one didn't even mention anything that you did. I will let him know what to look for. Thank you
Might not be appropriate! The Accountant should know about the VAT schemes, but has he been approached for advice in this scenario or just asked he his address can be used as a virtual car storage facility? I find that clients mostly go and do what they think is right before getting advice or even expecting us to be physic and know what it is they are doing and having to use guesswork when we receive some paperwork thats out of the norm. So perhaps your friend should ask for his advice and be fully open as to what he is planning.
The rest of the information I have mentioned is not based on me being an Accountant, but having real life experience and common sense eg buying a car and NOT seeing the dealers name on the documents, having test driven a car with trade plates on it. Im sure as a mechanic your friend will be aware of such things. Albeit my other knowledge (including some of the things mentioned on your other post) relate back to my days in Corporate Banking and previous life having looked after the finances of expanding new and second hand car dealerships/garages plus from my family having helped out a fledging body repair shop some years ago. IE not all Accountants will have had the same exposure to such things, or they may have better knowledge of different areas on the back of their previous work/life histories, therefore will not know the specifics of every sector and expecting them to do so would be wrong.
-- Edited by Cheshire on Saturday 22nd of October 2016 12:16:46 PM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
