CA's AIA's & Cessation of a Trade

CA's AIA's & Cessation of a Trade

Didn't find your answer?

I have a higher rate tax partnership client y/e 30/9, wants to start trading under ltd co from 1/5/2013 (ltd co  formed and currently dormant and has never been used)

So normal accounts for y/e 30/9/2012 assessable 2012/2013 and cessation accounts for 1/10/2012 to 30/4/2013 assessable 2013/2014

They desperately need a new van, if the van was purchased this week would it be eligible for AIA's (cost is under £25k & no other capital expenditure) or will it fall within no WDA, FYA and AIA's in final period of account 1/10/11 to 30/4/2013.

Trying to obtain maximum tax relief.

Been reading it over & over and at moment it is not sinking in.

Thanks

Replies (6)

Please login or register to join the discussion.

By George Attazder
26th Sep 2012 15:59

It doesn't matter what you claim...

... you'll get a balancing allowance or balancing charge, the net overall allowances will be the same.

The only thing that matters is the value that the assets get transferred to the company at, which will be dependent on whether or not the partnership and the company make an election under S.266 CAA 2001.

Thanks (0)
avatar
By oneillmark
26th Sep 2012 17:07

Hi George,

So am I correct in saying for CA's, FYA's & AIA's the final period of account for the partnership would be 1/10/2011 to 30/4/2013 and as such no allowances other than a balancing allowance would be available.

Say van cost £20k deemed disposal £18k market value, BA £2k for partnership, tax relief @40% £800.

Cost to Co £18k CA 18%, £3240 tax relief scr @20% £648.

Or is it normal basis period to 30/9/2012 and £20K eligible to AIA, partnership tax relief @ 40% £8k

Cessation period 1/10/2012 to 30/4/2013 van tfrd to Co @ tax wdv £0 no tax relief

 

Thanks (0)
By George Attazder
26th Sep 2012 17:18

No you can make a claim

I see your point.

Yes.  Because the period of accounts is longer than 18 months, you have to split it into a twelve month and seven month period (S.6(6) CAA 2001).

So as per your second calculation, you get a £20K AIA in the period to 30/9/12 and you would then get a balancing charge in the 7 month period to 30/4/12 of £20K, but you can elect under S.266 to transfer at the £0 wdv in order to avoid that balancing charge.

Thanks (0)
avatar
By carnmores
26th Sep 2012 17:59

@george

are you saying that the deemd MV is £18k seems a bit high to me , would the BC bnot be equal to the MV of the van - i told you it was damp!

Thanks (0)
By George Attazder
26th Sep 2012 23:33

@carnmores

Yes. You're right, the BC should use market value, and I suspect the OP's £18K might be a bit high too.

Thanks (0)
avatar
By oneillmark
27th Sep 2012 10:16

The £18K is a rough estimate

The £18K is a rough estimate (& I mean rough) 

Right I think I am clear now.

I can advise the partnership to buy the van this week before 30/9/2012, the partnership gets full £20k AIA in y/e 30/9/2012. Partnership cessation period 1/10/2012 to 30/4/2013 - market value at 30/4/2013 equals balancing charge, elect under s266 to tfr at £0 WDV to avoid balancing charge.

1/5/2013 Ltd co has van cost £0, no depreciation no CA's

Partners get tax relief at 40% on £20K

Thank you for your replies.

Thanks (0)