Capital allowances offset rule

Capital allowances offset rule

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Client has bought a Caravan to let on Haven site Nov 12.  Site is shut for winter.  First tax year the rentals are received is 2013/14.

I have conflicting advice from two HMRC inspectors and also a firm of Chartered accountants in Wales, who specialise in caravan lettings.

Year one (2012/13) nothing put on return as not income generated (although asset was bought in this tax year.

Year two (2013/14) they have let through Haven.

Year three (2014/15) they have let through Haven.

Question is capital allowances on the Van

Two lots of advice given

1) can put the let as a FL (instead of an FHL), and sideways claim CA's against any other income

2) can put the let as a FHL (if qualifies - or do a election for grace period to declare in 13/14)

3) can claim AIA's (but can this only be done in the tax year they bought the asset ie 12/13)

4) can claim CA's (either as an FHL against rentals of this only) or (FL against any other income)

Can anyone advise on this - seems to be a loophole.  My client has enough income to cover the full van AIA in 12/13 & 13/14.

In 14/15 has no taxable income as is now retired. So consequently all CA relief would be unused.

And rentals of Van will barely ever make a profit after Haven take their big annual site fee out.

Time is ticking for me to resubmit the 12/13 if I can claim full AIA's relief against his taxable income under the FL rules.

Any help would be much appreciated

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By Portia Nina Levin
26th Apr 2015 10:37

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