Setting up a company to purchase a vehicle

the O Reilly connection

Hi

I've been told if you purchase a vehicle through a company you're not charged VAT. Is it common practice for people to set up a company exclusively to purchase a vehicle at a cheaper rate?

Thanks

drunkmonkey

You can claim some of the vat back if you’re talking about a car, not all. You’ll also be depreciating it.
The big thing is your buying it with company money if you have some in it, makes a lot more sense than buying it with after tax money, buy the right EV and it’s pretty much free motoring. (Well not technically as you still have to make the money, no brainer though).

the O Reilly connection

https://www.boards.ie/discussion/comment/123589512#Comment_123589512

Does it matter if you're buying the vehicle with the intention of selling it on but then you just use it for yourself.

callaway92

100% not worth doing

If it was worth doing… y’know yourself..

Everyone would do it

From seeing your previous posts, you’re obviously not an Irish national and you are trying to scam the system, or else have just moved back home after being away and are trying to scam the system etc

drunkmonkey

https://www.boards.ie/discussion/comment/123589533#Comment_123589533

Why would you do that, makes no sense. You can give yourself the bike to work scheme as a paid for perk if you don’t actually need a vehicle.
If you’re thinking can you by a car cheap through the company and sell it on for a profit, don’t start an LTD unless you want to become best buds with the revenue commissioner.

JVince

https://www.boards.ie/discussion/comment/123589533#Comment_123589533

That's called fraud and revenue are very very good at finding fraud.

You can reclaim vat if you make a purchase in relation to a vat registered business you operate.

The vat is paid to the seller. You then make a vat return to the revenue showing you vatable income and vatable expense.

If there is a difference you either pay revenue or if your vatable expenses are higher than your vatable income, you request a refund.

If you show no vatable income and only a vatable expense, this is a red flag and you would likely be subject to a scoping enquiry which could lead to a full audit.

the_amazing_raisin

OP what you're talking about is buying a company car through your own company

It's often used by self employed people who do a lot of travel for work

You will have to pay BIK for the use of the car based on your business mileage and the market value of the car

In general higher business mileage gets you a lower rate of BIK. The car can be used for personal use but this mileage must be tracked separately to business usage

Commuting to and from work is not considered business mileage

There are very strict rules regarding the purchase of company vehicles and what can be claimed from Revenue

I briefly looked into while I was self employed, however my mileage was so low that it effectively ended up the same price as buying a car privately

In short, not a good plan