CAs on partnership cessation due to death

Husband and wife partnership. Substantial expenses incurred on equipment and also integral F&F in an extension to business premises. Wife dies half way through year.

I've done a single set of accounts for full year, which I've then apportioned between the periods - first half goes on partnership tax return and last half goes on personal tax return of husband on self employed pages. Fair enough so far.

But what about capital allowances? Presumably I can't claim anything for the first half year seeing it is a cessation of the partnership. Then I claim CAs in second half for sole trader having brought in WDV of asset pools. But for the second half, as it's a six month period, the rates/allowances are pro-rata'd so I can't claim full allowances. Is this right?

Also, what about AIA on assets bought in first half? I was hoping to bring in the purchases on day 1 of the new sole trader business and claim full AIA, effectively as pre-trading expenditure, but is that acceptable?

The way I see things, is that the client is going to be disadvantaged further in terms of tax because of the death of his wife due to losing some capital allowance claims? Surely this can't be right?

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Not a cessation of trade

Marion Hayes |