Q: My partnership bought new computers and peripherals in May 2003. We were not able to claim 100% first year allowances on this expenditure since our annual turnover is around £4 million, our assets £2 million and we have 30 employees, whereas at that date the limits for a small enterprise were £2.8 million, £1.4 million and 50 respectively ' we didn't satisfy two out of the three tests. Now the limits have changed but too late to give us the FYA.
A: Not necessarily! Suppose your year end is 28 February. The regulations to change the small companies limits took effect on 30 January 2004 with effect for accounting periods ending on or after that date. They therefore affect your accounting period to 28 February 2004 and, since the limits are now £5.6 million, £2.8 million and 50 employees, your firm now qualifies as a small enterprise.
Having settled the accounting period affected, qualifying expenditure in that period gains the allowances. Hence your claim should recognise qualifying expenditure for the whole twelve months.
Of course, if your year end is 31 December, this does not apply. Only expenditure from 1 January 2004 would qualify in this instance (and the allowances were withdrawn from 1 April 2004). Furthermore, the regulations specifically prevent an extension of the accounting period for the purpose of coming within the new limits.