Who is right?

[bopeeps]

I have NC for this as I don't want this thread associated with my name. DH and I are at a stalemate and neither side will cave in so I am looking for outside opinions.

DH is self employed and has done really well this year. He has not kept up with his taxes and we now owe a large amount to HMRC. He has decided that we need to spend £6k on a new vehicle so he can use it to lower his tax bill.

I think this is ridiculous as it will only lower his tax bill by £1k and this will not improve our financial situation at all because we will be out £5k more then we already are.

We have argued about this for the past month and neither of us can see the other side. He genuinely seems to think it makes sense to buy a vehicle, even though it makes little difference in the amount we owe. I think he either just wants a new car and is trying to convince me in a very bizarre way or he is simply delusional.

Who is correct?

Does he genuinely need a new vehicle?

He is being unreasonable BUT. how much does he owe HMRC? If it's £6k then he is being unreasonable. But if it's £60k then all this doesn't really matter because he's up shit creek.

It depends what car it is? What brand and colour? I think if it is going to last a while it could be worth it in the long run

No he doesn't need a new vehicle, though his is certainly older than mine.

He owes less than £10k so we are not up shit creek.

Well it makes sense to take advantage of the situation if he needs a new car regardless andcsnafford to pay his tax liabilities and buy the car. But if he doesn’t need it then there is no point.

@SarahLovezHerChildren2018 he wants a 2011 Volvo. I will admit that it's lovely and definitely better than what he has now but I can't understand the urgency and need to do it for tax purposes. AIBU?

If you owe less than 10k then it's foolish to spent 6k on a new vehicle to save £1k. At the moment you only have to find maximum £4k whereas if you buy a vehicle for £6k then need to pay HMRC £9k you still owe £9k! It's basic maths tell him stop being a silly Willy.

So say he owes £9k

He wants to spend £6k to lower the amount to £8k and therefore will have spent a total of £14k instead of the £9k he has to pay now?

That just does not make financial sense to me, he has a car and doesn't need another.

Surely he will get the tax relief next year or whichever financial year he chooses to buy his car?

Well I guess if he needs a new vehicle it could make sense, but obviously not if you're paying £6k just to get a £1k reduction in the tax bill.

Putting a car through a business is often not very tax favourable anyway (unless it is to be used more or less solely for the business.

If you owe less than 10k then it's foolish to spent 6k on a new vehicle to save £1k. At the moment you only have to find maximum £4k whereas if you buy a vehicle for £6k then need to pay HMRC £9k you still owe £9k! It's basic maths tell him stop being a silly Willy

I've read this several times and still can't grasp t. I'm also rubbish at basic maths!

@NoThankyouHun @fuzzywuzzy Exactly! It just seems bonkers and I can't understand why he is so adamant that this is a sensible idea. He's making me think I'm crazy.

But if already owes £6k then this won't change. He will still owe £6K. Any vehicle he buys will only offset future tax. And if it's a car it's not 20% anyway as it's restricted

Surely they'll be different tax years if he already owes HMRC?

If he buys a car now it will affect 18-19. That won't make any difference to the tax he owes until 31 Jan 2020 when he either pays the entire balance owed for 18-19 or the balancing payment.

If he can't pay it HMRC will rapidly file for his insolvency and the official receiver will take the car as it's an asset.....plus the nightmare that is bankruptcy. He needs to avoid this and pay what he owes as it is utter hell for everyone concerned not splash out further money on a car to reduce a tax bill that isn't due until 2020 as pps have said!

You can’t spend your way out of debt.

YANBU

Like Girlicorne said. Pay the tax bill. HMRC will pursue bankruptcy if there's any assets, and you'll lose the car anyway!

Also, please remember that HE owes the money, not you. I don't care if you're a team blah blah blah, it's him who has neglected his tax.

He’s being massively U. If he has money to spend then it needs to go to the HMRC.

Well to be fair he then has an asset worth six k for a cost of five k.

If you can afford it, it's not a bad plan. If you can't then it's a terrible one.

Yes which tax year is he talking about? Buying a car this tax year won't have any effect on what he owes for previous tax years?

Ps you're right OP. He just wants a new car.