My wife and I are in the process of abandoning life in the city and purchasing a guest house (VAT registered) in the highlands (a slight change in lifestyle!!). We wish to buy a second more business focussed vehicle. We have test driven the current diesel Nissan X_Trail and were very impressed by it's driving manners and good load area but I understand that if we bought a new commercial vehicle (ie a pick up), we could claim the VAT back.
1 Is my understanding of the VAT situation correct and will guest house revenues allow us to recover VAT. Are there any other tax issues to consider (the business will be a partnership).
2 What is the most car like pick up (Nissan Navara, Toyota Hilux, Mitsubishi L200, Ford Ranger, etc). The nature of the business means that traditional issues such as towing capacity and load handling are less important than road refinement and handling. We will be keeping it a long time so longevity and low maintenance costs are key. I am interested in the Navara and there appear a lot of keen deals at the moment - although I heard that they were not all to UK specification?
3 How feasible and sensible are these vehicles in towns, in car parks, etc? Will the compromises not justify the VAT savings + keen savings on current pick ups?
Apologies for the long-winded mail and thank you in advance for your help.
GAN
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You may have already considered this, but a pickup with its open load arae may not be the best choice for highlands, where it has been known to rain occasionally :)
Have you considered a van instead?
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I thought that you could get a load area cover to protect it from the weather and also secure the items?
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I have noticed a number of 6 seater vans that look like they\'re factory built van / minibus hybrids, rather than conversions. These have a second row of seats accessed via sliding side doors with windows, but are a normal windowless van from there back. I\'ve seen newish Mercedes and VW\'s like this. Don\'t know what the tax position is on these, but they could suit your needs.
If you\'re after a pick up, 4x4 would be useful - so what about a good old Land Rover Defender - there is now a double cab 4-door pick up version of the 110. Not exactly like a car to drive, but fun. And if it looks old fashioned, at least it\'ll last and will age gracefully.
Cheers, Sofa Spud
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Thanks for that SS. I went into the "What Van" website yesterday. For the 4x4 option, which we want, there is a choice of a pickup or as you say a 4x4 van. Looking at the 2003 award winners, the best two are the Mitsubishi Shogun and the Land Rover Freelander. Like you I also do not know the tax position of these. I am put off my the Freelander on reliability record and I suspect the 5 door Shogun would be out my price range. I really like Defenders and the only thing that would put me off is the level of creature comforts. SWMBO really liked the specification level of the X Trail (we are looking at the Sport version). Given she will also spend time driving the vehicle, she may find it a tad spartan?)
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>>Are there any other tax issues to consider (the business will be a partnership).
Yes.
Go and talk to an accountant. You'll find he's worth every penny, as he can navigate you around the thorny issues you have already identified - & others.
If the business is VAT registered (which it needs to be if its turnover is over about 55-60k per annum (cannot remember exactly without checking)) then you need to be VAT registered.
Once VAT registered, you can reclaim VAT on things used in the business, except cars. If you lease a car, you can reclaim 50% of the VAT. A commercial vehicle will indeed allow you to reclaim VAT.
The definition 'motor car' includes a vehicle that has to the rear of the dcriver's seat roofed accommodation which is fitted with side windows. But this does not include vehicles constructed to carry a payload (the difference between kerb weight & maximum gross weight) of one tonne or more.
You should check with your accountant current thinking on twin cab pickups, if you fancy one of those. This definition explains why in the UK you don't see those white small vans with windows in the back so favoured by French boulangeries.
Your accountant will explain to you how to get the maximum tax deductions for expenditure you incur. When you use things privately as well as for the business, you will have to make a suitable apportionment that he will explain.
Some things to think about (that will convince you why it is sensible to pay an accountant):
CGT will be payable when you sell the guesthouse, as it will not exclusively be your house.
NI/PAYE must be accounted for on any staff you have - cleaners, cooks etc.
You will have to (get your accountant to ) fill in your own tax return correctly. You will have to make your own NI payments.
When you come to sell your pickup, as a VAT-registered business you will have to charge VAT on it. Accordingly you can buy a second-hand vehicle from a VAT-registered business, and can still reclaim the VAT.
I often drive a Hilux (with an Ifor Williams hard top) around town, and enjoy it. the 2.4D 4x4 version has plenty of poke, and does 20mpg.
Enough! Find an accountant! Ask the current owners whom they use, and whether they are happy with him - he'll be familiar with the business which will save you money. If you have sufficient inclination (& half a brain :) ) you will probably be able to DIY in subsequent years.
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My Uncle's got a brand new Mitshubishi Warrior thing in black and as far as pick-ups go, it looks pretty damn nice. It's massive, imposing but practical as well. I'll be the first to admit, it looks a little "vannish" on the inside but it has air-con, airbags, electric everything and the amount of torque is phenomenal. It wasn't until he pointed out that it was diesel that I noticed! Ride was as comfy as any car, seats were nice, - essentially it is a car with a load area attached onto the back. We got looks everywhere perhaps from people thinking "why the hell does he need something that big" but he is an engineer and I suppose if you don't want to drive around in a transit van that's the next best thing.
One thing though, the proper cover, whilst looking nice is an optional extra if you are buying brand new.
Otherwise, a fantastic "car".
Adam
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Thanks MM. I have already booked in to see a local accountant when we make our next visit at the beginning of September. I have a large number of issues to discuss anyway as you can imagine. I was trying for an earlier answer on this point to plan a purchase prior to leaving. There are probably more places to buy / order a vehicle nearer London than there are in the Highlands.
I do in fact anticipate doing a lot of the accounting myself as I am in fact a qualified accountant but have spent my 20 year career in management, regulatory and statutory reporting as well as a raft of project and consultancy work - in fact everything except tax, which at this point would have been useful!!!!!!!!!!
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>>everything except tax
and even if you had, you wouldn't know anything about poxy boring PAYE, NI & VAT. Now if you wanted CFC advice...
As I mentioned, a second-hand van from a VAT registered vendor (it's previous owner, not the garage where you buy it) will allow you to reclaim the VAT.
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There are probably more places to buy / order a vehicle nearer London than there are in the Highlands.
That idea might also be worth reconsidering. It's not just that servicing options may be restricted in the Highlands (which might point you towards those makes of vehicle with nearby agents), but you will probably find that being seen to make those purchases locally will buy an awful lot of goodwill.
I have seen many rural areas where there is resentment of incomers who are perceived to be "doing local traders out of business" by shipping in goods from outside the area. You may have a difft take on that, but I suggest it's something worth considering.
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NW makes a very good point there, plus (and this is only guesswork) is the buying price likely to be less outside the London area?
Oh, and a dealer in the Highlands is more likely to have a handle on the necessary abilities of the truck in question than a dealer in London who usually sells them to someone who wants to 'pimp them up' with chrome wheels, so could advise you better.
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Thanks BB/NW.
I was in fact thinking more of buying from a Broker as there are some very good deals on the Navara currently around, which may beat any dealer offer. I think the current suspicion is that not all the good deals at the moment are UK spec. There are greater / volumes of brokers / supermarkets nearer to London rather than the highlands.
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