When can you claim capital allowances

When can you claim capital allowances

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If the buyer elects to pay for goods in full (ie clearly incurs the expense) within one accounting period but the goods are not delivered until the next accounting period (but within four months of payment date) what is the tax position on capital allowances?
I read with interest the e-mail trail entitled "capital allowances when can you claim/475125". HMRC position would appear to be stated in their allowances manual CA11700, referring to the date on which the obligation to pay becomes unconditional. But what if you pay up front in full? All the discussions seem to relate to the date at which the contract requires obligatory payment, and the examples given in the manual and in the e-mail trail to which I refer appear to assume that the buyer will pay for the goods as late as possible. The last HMRC example, citing the anti-evasion situation, involves a buyer of a sloop who arranges an artificial contract to require early payment, but with inbuilt deferment of terms across into the next accounting period. If there is no inbuilt deferment and the buyer elects to pay in full is this the date at which the expenditure is incurred? If not, why does the HMRC example of the sloop muddy the waters (forgive the mixed metaphor!) by putting the actual payment into the next accounting period ? It would seem that if the usual contract is payment on delivery then any departure would be seen as evasion, even if the money is paid in full prior to the end of the accounting period. Or is the actual payment in full the over-riding factor?

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By sheffieldaccountant
15th Apr 2011 13:53

Capital allowances

Its when the asset is put into use.  Farmers run into this problem buying an asset in one year but not using it until the following year.

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