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Capital Allowances - Balancing Charge?

Hi all.  I have a client who has ceased being self employed in the tax year 2011-2012 and become an employee.  I have taken over from a previous accountant but have been unable to get any previous years paperwork or calculations due to the Accountant being seriously ill. 

I know there is a Capital Allowances balance b/fwd of £6k which needs dealing with.  My client does not know what the capital allowance is or that he was even claiming capital allowances.  I think that it is for his vehicle which he still has. 

My question is do I write off the whole balance as a balancing charge (£6k) for the client to then have to pay tax on it? I have been advised by HMRC that is what needs to happen but would like other accountants views.

Thank you for any help provided.


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Treat as disposal at market value (Glass's Guide or similar) or if it's a wreck or for some other reason not worth book value, get a valuation from a friendly dealer.  Don't forget any prvate use element to be deducted from the balancing charge.

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Thanks the only problem is the client does not know what his Capital Allowances are that have previously been claimed for.  I am just guessing its a vehicle as he doesn't have anything else. He uses his car and motorbike so it could be both but without guidance from previous accountant I can not confirm. Previous accountant is no longer contactable and has never provided me with the documents required.  Any advice gratefully received.

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Ask client?

If the only potential assets were the car and the motorbike can't you ask the client for dates of acquisition and costs (approximate if necessary) and do a rough CA comp.  If you cam roughly match to the £6k tax wdv brought forward you'll know you're on the right track.

Incidentally, how come the only bit of information you do have is the closing balance on the CA comp from last year?  HMRC should be able to give you details of CA's claimed each year and also AIA but they wouldn't know the balance.

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I will go back to the client and check values of the vehicles.  I have calculated the CA b/fwd figure by using the C/A claimed on the 2010-2011 tax return which HMRC provided to me.


Thank you for your help.

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If there's £6k left on the pool and the decision is taken to write off the balance (bringing in proceeds of £nil) then you have a deductible balancing allowance, not a taxable balancing charge

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M/V at M/V

Any disposal must be at market value (probably on the low side) so it's likely a balancing allowance will arise. If you write it off at NIL then allowances granted could restrict the allowance.

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Sorry bit confused now as HMRC said it would all be a balancing charge.  The client has not disposed of anything but has ceased to be self employed.  I believe the C/A are for his personal vehicle he uses for work.  He still owns the said vehicle.  I am not 100% on what the C/A actually are as the client was unaware of any and the previous accountant is no longer working due to il health and not responding to any of my requests.


So if client has ceased trading and still owns the C/A (Vehicle) what is the best thing to do?

Thank you to all for your help so far.

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Either ...

... HMRC are talking nonsense (who did you speak to?), or you've picked up the wrong end of the stick. There could be a balancing charge - but only to the extent that market value were to exceed the £6k balance. The £6k itself cannot be taxable under any circumstances. Quite the reverse in fact.

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