Pros & Cons - Off balancesheet lease or direct finace with dealer

[sinbadsailor]

For a commercial 4x4.
Will be putting in an order for one for 2008 but I am a bit concerned over the restrictions etc from leasing companies after hearing from an uncle of mine about his comany.

Also, if I go direct and get finance from say a toyota dealer, will the finance be for the full (inc VAT amount)?
If so, do I submit the VAT amount to get it back in one lump in my next return or is it spread over a number of returns

And as the question asks, the pros and cons of having the vehicle on the balancesheet as apposed to a monthly repayment with you claim the VAT back on.

 

[Graham_07]

If so, do I submit the VAT amount to get it back in one lump in my next return or is it spread over a number of returns

VAT on finance lease payments are claimed with each payment, i.e. monthly if the payment is monthly. VAT on leases are not claimed "up front"

And as the question asks, the pros and cons of having the vehicle on the balancesheet as apposed to a monthly repayment with you claim the VAT back on

If the vehicle is on a finance lease then the vehicle shows as an asset on the balance sheet anyway with the related lease obligations under creditors part of which would be due in < 1 yr, >1yr & <2, >2yr & <5 etc.

The following might also be of interest :-
[broken link removed]

 

[sinbadsailor]

Thanks for that,

So basically what you are saying is that regardless of whether I:

a) finance the vehicle through a toyota dealer direct

OR

b) Take out a contract lease though a leasing company

The only difference is that on dealer finance, the 4x4 is a fixed asset on my balancesheet and if leasing company it is not?

So I take it then that if the price of the 4x4 is say, 35K ex VAT, a dealer finance would have me paying monthly installments on 35k+VAT and reclaiming the VAT portion on those repayments in my bi-monthly VAT returns?

 

[Graham_07]

There are two main forms of leasing. Finance and Operating. Finance leases, however financed, show as assets of the company with related obligations to the lease finance. Operating leases are not assets of the company, being pure rentals, and would not show on the balance sheet. Contract hire would be a form of operating lease. You have an agreed rental and return to the owner at an agreed price after a certain term. You need to check what form of finance is most suitable to your circumstances and the repayments and therefore VAT will be constructed accordingly.

Google, operating lease / contract hire for Ireland and you will get a lot of information from Irish motor dealers, ( without naming any here )

 

[sinbadsailor]

I am in a squeeze really. Operating lease would suit better, less hassle over assets etc, fixed monthly payments, being able to hand back after the 3 years or so, it's just I have heard bad stories about service schedules, exit costs and over-mileage charges from leasing companies.

I guess I just need to compare the finance benefits and see if either one will outweigh the negatives of the operating lease conditions

Thanks for your help