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MILK QUOTA- FIXED ASSET? - TAX TREATMENT

MILK QUOTA- FIXED ASSET? - TAX TREATMENT

I have had question posed to me which I think I know the answer to.....

A purchased milk quota is a fixed asset - assumingly amortised over the useage of the literage granted - ie the portion of the cost of the quota is matched to the sales volume in the accounting period - this is presumeably an allowable expense

When it is sold on with a balance of litres left over - is this taxed as income/allowable loss or capital gain issue?

The question I was asked - is it CGT? - I think not as it is a trading asset - so is the profit or loss allowed/taxed in the accounts as a trading transaction.

Thanks in advance for any input.

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27th Jun 2012 12:16

This could be a

starting point. Hopefully useful?

http://www.hmrc.gov.uk/manuals/cgmanual/cg77886.htm

The value of milk quota has taken a dramatic downturn in recent years in line with the demise in dairy farmers generally.
At one time, even Manchester United owned milk quota! Presumably, at the time, it was felt that this was a valuable asset? How times have changed.

I've always treated this as a capital asset and, due to the interaction with CGT, have avoided the question of writing any value, on an annual basis, from the quota.

 

 

 

 

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27th Jun 2012 16:38

Intangible Fixed Asset

If purchased

by a company liable to UKCTon or after 1 April 2002 from an unrelated party

it's within Part 8 CTA 2009 - the intangible assets regime.  Furthermore it's a fungible asset, which gives even more potential for fun (no pun intended).

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