Buying stock from yourself

[Darkbluecars 10]

Hi all, more of an accounting question than a vehicle question 

I've been trading since 2005 first from home and then from a Unit. I've currently got a couple of cars that now fall into the bracket of popular classics. One in particular has appeared in quite a few years of the accounts, in the opening and closing stock sections. Taking life a bit easier these days and would like to take the two out of stock into my private ownership. 

No problem with registering them in my name but as far as valuing them for tax purposes does anyone have any idea how to go about it. I've had a few over the years that I've bought as stock but then a close family member has wanted them and they've gone back out showing a nominal profit only. On the market the two cars in question would show a combined profit of approximately £4500 on their valuation. 

So the question is what do I have to pay for them. 

Any thoughts or experience would be appreciated. 

[David Horgan 564]

Your a trader charge yourself trade money " simples " You can sell them at what price you like cant you . 

[trade vet 702]

Hi

I have experience of this.If you are a ltd company this would be a ‘connected party transaction’ and would have to be clearly stated on your annual accounts.The transaction has to be at current market value.Years ago we bought a new car,claimed the vat back and leased it to my daughter.This was clearly stated in our accounts but several years later HMRC assessed that the lease payments were below market value and wanted to tax us on the difference.I proved otherwise.So you must be very carefull otherwise it can come back to bite you in future years.

[Willoughby 15]

Don't think its quite that easy as it would be seen by the tax man as appropriation of company assets at below market value, particularly if they have either been written down or had work done by the business without reflecting that in the their sale value......So you should sell them at something like market value - taking into account their condition, if they had a few issues (say engine problem or some other issues) you would value them accordingly! - just keep a written note on file in case you were ever asked to justify it.

 

[Dave2302 387]

I'd sell them at a loss after all they've been in stock a few years and must have depreciated a bit by now 

[Darkbluecars 10]

Thanks Willoughby and Trade Vet. That confirms what I'd suspected. I'm not a limited company but it does make sense that it should be at market value. The opportunity for avoiding tax would be to transfer appreciating classics into your name then use your personal annual Capital Gains Tax Allowance to minimise the tax bill. 

[Arfur Dealy 823]

2 hours ago, Darkbluecars said:

Thanks Willoughby and Trade Vet. That confirms what I'd suspected. I'm not a limited company but it does make sense that it should be at market value. The opportunity for avoiding tax would be to transfer appreciating classics into your name then use your personal annual Capital Gains Tax Allowance to minimise the tax bill. 

If you aren't a company, it's your money and you can do what the hell you like with it, you are a trader. You only pay tax on your profit and are not tied to Ltd Company regulations. You buy, you sell, you pay tax on the difference minus deductions...simple

[Dave2302 387]

Even a limited company can sell something at a loss if it's been in stock for a while, it's called "clearance", however, as, (if you were Ltd), it is "your company" to avoid the evil eye at audit time I would suggest buying it at a very small profit !!

As you are not Ltd I fully agree with Arfur

Edited March 23, 2019 by Dave2302

[MattR 177]

Not Ltd? Then there is no transfer as you already own the cars, just with a different name on the log book. I would only think there would be any tax to pay when the cars are sold to someone who isnt you for a profit. So I would see no reason to take them out of the company name, that way any maintenance is still tax deductible?

[Dave2302 387]

1 hour ago, MattR said:

that way any maintenance is still tax deductible?

Not if you are not using the Car for Business Purposes it won't ...........

Vehicles and mileages etc are the first thing HMRC look at during Audit !!