There is a client who entered into an installment sale agreement with a motor vehicle financier.
The client has a history of always purchasing a company vehicle in the name of the company in the past.
However during one particular year the company was not in time for the trade in of its old vehicle for a new one and this caused the member to purchase it on an installment sale agreement but on the member's
own name.

The company then undertook to pay for the installments, and enjoyed the use and the operation of the vehicle.
The company pays for the fines, petrol, insurance and all costs relating to the maintenance and running of this vehicle.
The only assertion outstanding is that the vehicle is not in the name of the company. But the ISA is between the vehicle financier and the member himself.

Theoretically and legally, this vehicle cannot be recognized in the AFS of the company as its rights and ownership of the vehicle does not rest in the company's name.
However, the installments paid every month, as well as all costs mentioned above (petrol, fines etc) relating to this vehicle now forms part of the member's personal loan from the company.
Causing the member to owe the company literally the entire cost of the vehicle (all installments) as well as the other costs.

The vehicle was eventually traded in, for another one but this time in the name of the company.
Thus, the vehicle in question is now disposed of.

However, the loan owing by the member to the company (an asset) will never be repaid by the member because he argues that the vehicle was used for business purposes.
Because this loan is not recoverable, it clearly should be impaired.
However the impairment of this loan will look very odd in the AFS as well as the tax consequences.

My question is: can I argue the principle of "substance over legal form IAS 17)?
Meaning, I will recognize that vehicle (in the year it was relevant) as the company's vehicle between the company and the financier.
And it's corresponding ISA debt. (dr asset; cr isa debt)
And upon trading in , do the necessary gain/loss etc?
This in turn eliminating the member's loan account.

Or can one let the member create a lease agreement between him and the company, whereby he charges the company rental costs for the use of the asset, which eventually totals to all the installments raised
as the member's loan amount? I know that the member will have to declare this as income in his personal tax.
However I find this solution dodgy as the vehicle is not paid by the member so he has no right to claim rent from the company who is initially paying the vehicle's costs?

Is there another solution to the write off of this loan, in a manner whereby I can recognize that vehicle or some form of expense as technically that loan will never be recoverable as the
company enjoyed the benefits and not the member?

I feel that the first option seems the most accurate in presentation and fairness of the AFS.

Thank you.