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self-employment ceasation, how to deal with fixed assets

Client ceased his sole trader business at end of the 2010/11 tax year, and went into a partnership operating a fairly similar trade.  

 I am unsure what to do with equipment, now used in new trade where AIA was claimed last year.

Do I put in a balancing charge for the sole trader and bring the assets into the new partnership at that value?   I think I am getting confused

because he hasn't actually sold the items, but has made a full claim on them.  Sorry if this sounds very obvious, my brain is is grinding to a halt.

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By nads
25th Jan 2013 15:28

If

 

I understand the question correctly then IMO just treat the accounts and tax as separate issues...

the sole trader correctly had the full benefit of the AIA in 2010/11, so claim no further capital allowances . 

From an accounts perspective, remove the equipment from the sole trade at net book value as drawings on cessation and then introduce it into the partnership as capital introduced at the same value and continue to depreciate it. 

 

 

 

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By jem
25th Jan 2013 19:35

 

 

 

Thanks for that.   I think you are absolutely right, I need to not think about the tax and accounts scenarios as being connected.  

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By redman7
26th Jan 2013 08:22

couple of points

AIA can't be claimed in year of cessation, I couldn't quite gather whether you are saying the AIA was claimed in 2010-11 and the business was sold / ceased in 2010-11, but if you were, I think that is incorrect and WDA should have been put through only. See 'General Point 1' below

http://www.hmrc.gov.uk/manuals/camanual/CA23084.htm

 

I would then think the next step is to transfer the asset over to the partnership at market value or elect to transfer at tax written down value.

and then, as you say, deal with balancing allowance / charge in the sole trader business

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