Here is some more info on the scheme.
There are very few rules apart from the fact that the employer must pay for the bike and get reimbursed by you and the employer has to do some basic check that you cycle to work, but a signed declaration from you is acceptable.
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In answer to the OPs question, what you are asking your colleague to do avail of the cycle to work scheme, and lie on the declaration that he will cycle to work and then sell you the bike.
As the rules do not state how often you have to cycle to work, or how long you have to keep the bike for, he could use it once to satisfy his conscience and your HR department.