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Transfer of fixed assets between related companies

Transfer of fixed assets between related companies

Please can someone offer some advice on the whether fixed assets transferred between companies where there is a related party connection should be transferred at Net book value or market value within the accounts? At the moment the assets have been transferred at a value higher than the net book value and physical cash paid between the companies.

Also Do these transfers have to be disclosed in the related party transaction note?

Any replies would be appreciated.

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22nd Nov 2012 20:40

Nil gain nil loss
My preference would be to make the transfer at NBV, so there is no profit or loss.
I would also make a note to that effect.

Thanks (1)
23rd Nov 2012 13:43

Market value

The assets should be transferred at a market value so that the transferee company has a realistic cost in its accounts.  If the net book value in the transferor company is a reasonable approximation to the market value, so be it - otherwise, you are likely to have a profit on SOFA in the accounts and a balancing charge in the capital allowances.  I would not bother to change the price if money has already been paid (and VAT already charged and reclaimed).

Yes - under the FRSSE, of course, the nature of the transaction and the amount must be disclosed under a related party note.

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26th Nov 2012 14:23

Anti Avoidance legislation

Just been reviewing this further in line with anti avoidance of claiming AIA between connected persons.  The assets being transferred /sold have a nil TWDV and therefore would generate a balancing charge on the capital allowances already claimed.

Am I able to claim AIA in the company "buying" the assets?

Thanks (0)
26th Nov 2012 15:46

Not if...

... the companies are connected (having common control).

You can make an election under S.266 CAA 2001 to treat them (for tax purposes only) as transferred at tax written down value though.

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