VAT loophole

I own a company and am registered for VAT ie I can claim back VAT on invoices. Hypothetically speaking, if i bought
a toyota landcruiser (30020euro+7980euroVAT) and claimed back the VAT at 21% and in one year resell the Landcruiser to a family member/friend at a knock down rate (3950euro+1050euroVAT).
Then in year two your family member/friend resells the landcrusier for the proper depreciated value of -4000 per year (getting 30000euro).
So therefore you have technically had a new landcruiser for 2 years and it has only cost you 1050euro ie the VAT paid back to the government on the resale of the Landcruiser to the family member/friend.
Could you please help me out and tell me if this would work.

If you're buying your vehicle through the company, isn't it a company asset and wouldn't that have to show a 'normal' rate of depreciation over a set number of years? Your accountant might raise his/her eyebrows at the apparent depreciation level after one year.

So - basically - are we talking about proposed tax evasion here?

The title of the thread may be somewhat misleading. To have a loophole demands that there be a present gap or inefficiency in existing legislation which legally permits a taxpayer from availing of it to their advantage in legal tax avoidance ( as opposed to illegal tax evasion). Such loopholes, when discovered by Revenue/Government are generally closed off pretty quickly. An example would be the closing off in 2007 of rent-a room relief to parents in respect of adult children living at home who could also be claiming rent tax credit.

In the case at point, the OP is not proposing to avail of any loophole in existing legislation as far as I am aware. What is proposed ( albeit hypothetically) however is a transaction which,
(a) means loss of legitimate Revenue to the government in form of VAT on the proper re-sale value of the vehicle and
(b) means loss of an asset to the company , i.e. the proper cash which the company should have received on sale.
Under self-assessment tax legislation the taxpayer is obliged to make an honest return of their income for the year and self-assessment has checking mechanisms in place via Revenue Audit etc. to ensure that this is the case.
Under company law the directors of a company have an obligation to safeguard the assets of the company.
The proposal at hand, being clearly in advance a scheme to contravene both of the above, would, to my mind, constitute both tax evasion and breach of duties as director.

wallycool said:

Iif i bought
a toyota landcruiser (30020euro+7980euroVAT) and claimed back the VAT at 21%

Click to expand...

But you cannot claim back the VAT on a motor vehicle!!!!

Thanks - given that analysis I am closing the thread.