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AIA on IT equipment

Director brought IT assets for self learning

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Sole Director of  Limited Company brough some networking and server equipment.  He is a IT Contractor but is not using the equipment in his current role.  He said he brought the assets as would like to train himself to be ready for his next contractor role.  

I am not sure if AIA can be claimed ?



Replies (7)

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By SXGuy
07th Feb 2020 18:24

I vote no.

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By ospevack
07th Feb 2020 19:07

i would consider with'wholly and exclusively' in mind.. the burden of proof falls on your client, which is a point i'd make them aware of - why would joe public would buy networking and server gear without productive intent?

my gut feeling says, with the limited info above, that this could be a reasonable claim.

if he was a freelance scuba diving instructor the story would be different.

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By Accountant A
07th Feb 2020 20:52

I know little about IT and have no idea how much is at stake but, if you define him very broadly as an IT consultant (rather than very narrowly as a Sinclair Spectrum ZX Version 2 motherboard chipset USB/SIMM/DIMM specialist), then is it that much of a stretch to say it's for his trade?

Assuming it's not a 2 bit company that's spent £1m, I'd be amazed if HMRC would even raise the question let alone take issue with an IT company buying a "bit" of IT hardware.

I suppose that's the point ospevack makes.

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By Matrix
10th Feb 2020 11:40

I thought employee training costs were allowable so I don’t really see why you would disallow this equipment, what is the concern?

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Replying to Matrix:
By Tim Vane
10th Feb 2020 11:50

Take a look at BIM47080 that lays out HMRCs view which differs from yours in disallowing expenditure in cases such as this.

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Replying to Tim Vane:
By The Dullard
10th Feb 2020 13:44

1) BIM47080 is a big pile of horse manure in a non-corporate context.
2) Ir's an even bigger pile of horse manuer in a corporate context.
2) It's a truly gargantuan pile of horse manure when misapplied to the question of whether capital expenditure qualifies for plant and machinery allowances, where the test is whether the asset concerned is used (wholly or partly) for the purposes of a qualifying activity; training employees being a purpose of the qualifying activity.

Other than that, excellent point, fantastically made.

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By Dib
10th Feb 2020 13:16

The OP says the director bought the equipment so shouldn't we be looking at the question of capital allowances for an employee. That would mean WE&N not just W&E

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