Capital allowances and insurance proceeds

Capital allowances and insurance proceeds

Didn't find your answer?

Hi

An asset sustained fire damage, the client received insurance proceeds but later decided to sell the asset. I need to determine what would influence the capital allowances position of this event and questions I need to ask the client.

I understand that permanent loss or destruction triggers a disposal event for CA's at the date the asset was lost and disposal to a third party. But I am I right in thinking that this would trigger two disposals? Then would the new asset be treated as an addition? If the insurance proceeds were not used in repairing or buying a new asset does that lead to a different treatment for CA purposes?

Any thought's would be helpful. I can't seem to find anything!

Many thanks!

Replies (3)

Please login or register to join the discussion.

By Steve Kesby
29th Jun 2012 16:04

Forgive me sounding a bit dense...

... but if the asset was destroyed, how did it come to be sold?

I'd say that your disposal event was a sale within item 1 of the table in S.61(2) CAA 2001.

If you think you've genuinely got two disposal events, then read S.60(3).

Thanks (0)
Replying to QuentinPain:
avatar
By TaxAssistant
29th Jun 2012 16:26

Missed a point out...

Sorry I must have missed the point out, they received insurance proceeds but we do not know what they did with this, they did purchase a replacement but we do not know if they repaired the damaged asset and then sold it as a whole or just the bit that was not damaged by the fire. If that makes sense?

Thanks (0)
avatar
By Chris Smail
29th Jun 2012 18:09

I think you had better ask the client don't you?

You seem to be lacking facts rather then knowledge of the law.

Thanks (0)