Dear All,
A company has been set up to hold an expensive car, which it is hoped will prove to be a 'classic' in years to come. It is being maintained, insured, etc., but from what I can gather, there is no intention to derive income from the car - it will not be hired out, for example. I understand that the company owners hope to sell the car at a gain, in several years' time. The company has no other purpose.
To me, and in terms of administration, this is clearly not a trade but arguably a company with investment business. I am not sure I can rustle up enthusiasm for the idea that it is 'actively managing its investments' and I am inclined to think that the costs of maintaining the asset itself are not deductible management expenses.
I think that the car's ultimate disposal will be a corporate capital gain. Cars are generally exempt as wasting assets but with the proviso that Capital Allowances have not, and could not have, been claimed. In this case, I do no think that the asset is being used for a qualifying activity. I realise that managing investments can be a qualifying activity in its own right for the purposes of CAs but I should argue that this would extend to premises, office equipment, etc., used for managing the company's investment assets, rather than the investment assets themselves.
I should be grateful for your perspective(s). I am not sure why it was decided to hold the car in a company, although it does occur to me that there is perhaps a marketing / commercial aspect - "own some shares in a classic car" would probably be easier than, say, "buy the passenger-door wing mirror".
Kind regards,
Lambs
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