Personal Tax Liability on Selling Car at a Profit

[Carlblues7]

Hi there,

I am after some guidance with regards to personal tax liability after selling my car and making a profit above the acquisition price.

I purchased my management loan car from Ford Motor Company after paying the settlement value of £14,120 in October 2022. I kept the car for 8 months and sold it at the end of June 2023 for £16,984.

Following a Ford audit, they advised that I was not able to sell the car at a profit and that I have to pay a tax liability of 20% on the profit. Note that I am a retired manager with Ford.

Having reviewed with HMRC in Newcastle, they advised that as I was the registered keeper of the vehicle since October 2022, then it was classed as a wasting asset and I could sell the car as and when I wanted to without any tax liability on profit. If I was classed as a trader, then tax would be due. I sold the car to a franchise dealer.

Ford dispute this and state that I have a tax liability. I have advised that they cannot take any tax from me as only HMRC can action that with me directly. However, as reviewed twice with HMRC, the car was my personal asset with the registration document in my name as registered keeper.

Therefore, any additional guidance would be greatly appreciated.

Finally, there is no CGT to pay as it's a wasting asset with a projected lifespan of 50 years and does not fall into the category of being a classic, etc

Regards
Carl

[MaryS57]

As it was a private sale, it's not clear why Ford would have the right, or facility, to deduct CGT.

In any event, if CGT is erroneously deducted you can reclaim from HMRC via filing a Self Assessment (SA) Tax return.

I too have been erroneously charged twice by HMRC for a small capital gain, and I am in the process of reclaiming the over-charge from HMRC.

[Carlblues7]

Thanks for response.

I outlined CGT at end as they cannot apply this tax as wrong vehicle category.

They state that because I sold car at a profit of £2,,864 above my purchase price that I owe a personal tax liability of £572.80 (tax @ 20% base rate.

I understand that I would owe HMRC tax if I was a car trader, however this was a 1 off sale as a private individual, 1st time I had actual sold car without using it as a part exchange. The V5C was in my name as the registered keeper and vehicle was 32 months old without any finance.

The whole issue seems to be that I made a profit selling my previous management role car I had purchased from them and they are classing it as a benefit in kind profit.

[atticus]

What are Ford intending to do about it, if anything? Will they make a deduction from your pay? If so, will you be able to recoup it through your tax return?

How do they know about the price for which you sold your car?

[Carlblues7]

They carried out an audit and advised that I had not adhered to the scheme rules in that I did not keep the vehicle for the required holding period.

I initially signed a 12 months fixed sum loan agreement, but this was extended by an email from Ford Credit due to delays in supplying a replacement. I therefore made 24 months of payments and then settled the loan and became the registered keeper. I kept the car for a further 8 months and sold it when it was 32 months old. It must be noted that upon signing the agreement it clearly states that title of the vehicle passed from Ford to myself upon delivery, yet I do not become the registered keeper until I settle the finance. Ford state that I had to keep the car for 12 months after I settled the finance, whereas I only kept it for 8 months

They stipulate that I MUST NOT make a profit when I sell the car.

They have requested me to supply the price I sold the car for, otherwise they will make a market value estimate and then apply a tax liability to the profit made.

I have argued that as title passed to me upon delivery as outlined on the agreement (CCA 1874 applicable), then the car is mine to sell as a private seller, especially with V5C in my name. HMRC advised me that I can do whatever I wanted to do with the car and if I sold at a profit then that's my good luck and there would be no tax liability.

I believe that Ford don't appreciate the fact that I made a profit and not them and are taking me to task.

It must be noted that I purchased a later car which I still own, which is eligible for me to sell in November having met the scheme rules. If I sold this car, I could make a profit of £4k+, yet they stipulate that I must not make a profit. This would imply that I would have to keep the car until it was circa 5 years old before I could sell it for less than my purchase price, surely this is not legal binding.

[Carlblues7]

As I am a Ford pensioner, they are implying that they would take any taxable benefit directly from my pension.

I do not complete tax returns as my pension is my only income, which is taxed accordingly.