Company Van

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paulod

Registered User
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Hi,

What are the options for a small VAT registered Limited Company to invest in a Company Van?

Can you use company funds to buy the vehicle? What are the tax implications for this? Can you only use profits generated by the company after paying Corporation tax to buy an asset like this?
Being a sole Director of the Company I could use part of my salary with a private HP agreement and use the VAN for any company business.
If the Company was to take out a small loan to pay for the Vehicle how are the company funds used to pay off the loan?
To use the VAN for provate use would I have to pay BIK?

Many thanks for any advise.
 
Can anyone elaborate on how you can use company funds to buy an asset like a Van? Is this possible? thanks
 
Yes the company can use its funds to buy a van. AFAIK VAT on commercial vehicles can still be offset against VAT receipts (check this with an accountant). Private HP agreement would not be advisable as this would create problems in applying the payment for the van against company funds, amongst others. Why not let the company enter the HP agreement? You can supply a private guarantee if required.
Loan would not be an issue, provided bank was happy to facilitate same. No issue on using company funds to cover loan repayments.
BIK would apply if the van was habitually used for personal use. With commercial vehicles it tends to be a grey area & unless you have clearly no other vehicle available for own use, it doesn't tend to be an issue.
 
What would happen to the asset in say, a years time if the Company ceased trading and had no liabilities? If the Van was transferred to the employee I assume the employee would have to pay the VAT on the initial purchase and tax at 41% of the current market value of the Van. Would this be correct?
 
The company is effectively selling the van to the employee. VAT would be due on the market value of the van at the date of sale.

Tax, PRSI and USC would be due on the value including VAT.
 
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