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AIA Transitional allowance

AIA Transitional allowance

I paid a small reservation deposit on a new pickup (VW Amarok) before Christmas (one side of the transition) but will be picking up and paying the full finance deposit on the pick up in a few weeks time (the other side of the transition). is there any impact because of this regarding the AIA transitional moves - I don't have enough of the allowance available prior to the change. My ghut feel is "no" but just in case is there anything I should be considering prior to completing the transaction?




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05th Feb 2013 21:33

Date of expenditure.

The key to your question lies in determining the deemed date of expenditure.  That date is the date on which there is an UNCONDITIONAL obligation to purchase.   In the circumstances outlined by you, clearly there was  NO unconditional obligation to purchase as at 31 December 2012 so the deemed date of expenditure will be after 31 December 2012.  

The answer to your second question ( "anything I should be considering...") is over 99 percent certain to be "NO" if, as seems to be the case, you have a small business.  To be 100percent certain, please indicate the likely estimated other capital expenditure in 2013 ( excluding cars) and the accounting year-end.   

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06th Feb 2013 09:21

Faulty Basil is right...

... that the amount of AIA will depend on both when you are treated as having incurred the expenditure for capital allowances purposes (assuming of course that the "finance agreement" is of the nature of a hire purchase agreement, rather than a finance lease, otherwise, capital allowances aren't in point) and the period end, as the transitional rules will restrict the £250K allowance until you've reached the beginning of the next period.

He's not COMPLETELY correct though to say that expenditure is incurred when there is an unconditional obligation TO PURCHASE. What S.5 CAA 2001 ACTUALLY says that expenditure is incurred when there's an unconditional obligation TO PAY [the expenditure concerned], which is subtly different, but nonetheless DIFFERENT.

In the case of a conract of the nature of a hire purchase agreement, all expenditure is then deemed incurred (under S.67(3)) when the asset is BROUGHT INTO USE.

You haven't really given sufficient information for anyone to answer your question though, which is probably why Faulty Basil gave such a FLAWED response.

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06th Feb 2013 09:34

Your response ...

... is SPOT on, George (even though a little on the BRIEF side) ;)


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07th Feb 2013 00:15

Thanks, Mr Attazder.

Thanks, Mr. Attazder, for your kind opening acknowledgment.  With respect of course, one has to make certain assumptions in order to simplify the answer for Will : he refers to the proposed purchase of a van, which is presumably for use in his business ( otherwise he would not be entitled to AIA). 

Whilst the legislation  refers to the obligation to "pay", a trader buying goods is legally obliged to pay for them on delivery unless there are terms to the contrary in the contract - it would be unusual for the purchaser of a van to be given "terms to the contrary" : hence, in the context of the question posed by Will, the "subtle" difference would  also be irrelevant.     

In similar vein, I also assumed that "hire purchase" would not apply : as you rightly point out there are different rules where HP finance ( and only HP) applies , the relevant date being the date the goods are brought into use : again, however, in the case of Will and his VW pickup, he is hardly likely to start using it on a date materially different from when he takes delivery of it    (and any minor difference in the dates would only potentially be relevant in the exceptional circumstance that one of the two dates fell into a different accounting period from the other) - even in that exceptional circumstance, the AIA figure available is exceptionally unlikely to be affected in Will's case.

Mr. Attazder, our primary function ( since you too are clearly a qualified accountant and/or  "tax expert" - perhaps indeed you are a retired practitioner in view of the substantial number of extremely good posts which you kindly contribute to this site) is to answer questions posed, and we should "strike the right balance" depending on who has posed the question and his specific circumstances.    In the case of Will, I decided that brevity was appropriate, and I still hold that view.       Indeed, I went further in inviting Will to email me directly, via "PM", if he had a further query, even though, as you can see from the timing of this post, I restrict my access to this site to well outside office hours ( you may perhaps be kind enough to offer Will that same facility, since I note you post many comments during office hours).

I stand 100 percent behind my initial reply to Will's question.

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07th Feb 2013 11:40

I see ...

... it is OK for you, Basil, to make assumptions (not clearly stated and not obvious), yet you accuse others who do so (even where the assumption is more obvious) to be WRONG?

I decided that brevity was appropriate

It's a pity that doesn't apply to all your posts.

a trader buying goods is legally obliged to pay for them on delivery unless there are terms to the contrary in the contract - it would be unusual for the purchaser of a van to be given "terms to the contrary"

More sloppy wording. In my experience, "cash on delivery" is the exception rather than the rule - in the case of significant plant and vehicle purchases it is often the case that full payment is not required until a later date. The unconditional obligation to pay may well arise on delivery, but that is not the same as saying that the purchaser is "obliged to pay for them on delivery". Again a subtle difference, but an important difference.

I stand 100 percent behind George's comment. The fact that you feel the need to go into such length in a FAILED attempt to justify your careless wording vindicates his remarks.

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07th Feb 2013 10:29


Wrong thread!

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07th Feb 2013 11:21

Assumption and Brevity

Faulty Basil, the brevity in your initial post is nothing short of atypical and assumption is a dangerous thing.  When you cross a busy street, do you assume that there are no cars coming? Or do you take the precaution of looking?

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17th Feb 2013 00:48


BKD. The purported "subtlety" is an illusion - fully explained in lines 14 to 18 of my last post. 

GA. Since you  have admitted in other posts that some assumptions are relevant and some not, your comments are less than rational, but quite amusing nonetheless.  

I obviously move in more humble circles than you folks.  In my neck of the woods, the likelihood of  the majority of Joe Bloggs all  walking out of the main agents with  brand new vans costing nigh on 20k each, without paying for them ( no doubt in your more exalted circles it's " here are the keys Bloggsy, perhaps you might like to drop a cheque off  if its not out of your way, or sign up a finance agreement if we can find the forms - oh, but wait until your next accounting year starts, whenever that might be ") is about as likely as the Canadian All-in Wrestling Team winning the Boat Race with 8 matchsticks on an ice cream wafer -  sorry folks, that's only my assumption about the buoyancy of the wafer  -  but, quite seriously, the notion lies at the heart of the supposed "subtlety" - just think about it, folks.

You're prejudicing your chances of parole, GA !  





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17th Feb 2013 08:52


The purported "subtlety" is an illusion - fully explained in lines 14 to 18 of my last post.

No, it is not explained. You were referring to a delay between date of delivery and date of bringing into use. I was talking about the timing of the obligation to pay and the timing of actual payment - a quite different point to yours. Clearly I was right - the subtlety is lost on you.

I obviously move in more humble circles than you folks

Perhaps so. A client of mine has just taken delivery of a new £250k tractor. No formal finance, but payable in two instalments in 30 and 60 days.

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17th Feb 2013 12:30

Answering BKD's headline question . " YES FULLY"

 @ BKD.

To answer your first point, debate about perceived "subtleties" is counter-productive.  You obviously have  a different view from mine about what MY post meant.  The debate is one of semantics only.   If it were relevant I would explain why you were out of order in your attempted criticism, but it would take us nowhere.     The central point which you refuse to acknowledge is that if all the dates are in the same accounting period ( whether date of purchase, payment date ,date of delivery, date of finance agreement, date of being brought into use or whatever other dates you wish to introduce into your argument) then they are all IRRELEVANT.   I think you will find that I have never tried to tell YOU what YOUR posts mean - kindly reciprocate ( the "subtlety", as you put it, was fully understood).  MY ORIGINAL post intentionally asked what the accounting year-end was and intentions about other possible capital expenditure, so that if there were any chance that a difference in dates was a factor, then I could elaborate.    I now regret my responding to the attempts at obfuscation by yourself - it is not a mistake which I shall repeat, and if I encounter a response to this post of " that just shows that you have lost the argument", which is a disingenuous tactic used sadly by you previously ( whether in this thread or another) I am happy to allow any interested other parties ( if we haven't bored them to death !) to draw their own conclusions.       


I am impressed by the your moving in more exalted circles ( your second point refers) such that you know of a purchaser of a quarter million pound tractor.  I admit again to moving in humbler circles.   Perhaps you also know of clients or friends who buy wholesale supplies of Designer Fashion Clothing, Jumbo Jets or Centurion Tanks.  I would surmise that the normal payment terms for purchases of top of the range tractors, Designer Fashion Clothing and Jumbo Jets are probably all different from each other - conceivably, to be scrupulously fair, those terms might be the same in each case - quite frankly, however, those payment terms are of equal irrelevance, because the original question was about a VAN under £20K, NOT a Jumbo Jet NOR a £250,000 tractor.   I make this point purely for completeness, since, as already explained on previous occasions, and in the first paragraph above, it has absolutely NO RELEVANCE at all, as you are fully aware.

 @ Will ( whopkinscom) and  others.

For the reasons explained above, I shall not make any further  contributions to this debate, although of course I remain willing certainly to advise Will via the "PM" facility if  he is not entirely sure ( his accountant, if he has one, should in fact be able to advise on this point, but I am happy to oblige).

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17th Feb 2013 18:52


So many words, and so little said - again. You're the one throwing all the red herrings in whilst ignoring my very simple and straightforward point.

All I had pointed out was the sloppiness of your words - a trader buying goods is legally obliged to pay for them on delivery unless there are terms to the contrary in the contract

I am not immune from making mistakes, or using words carelessly, but you will find that I am usually only too happy to acknowledge that when required. You on the other hand appear to be unable to admit your mistakes and be hell-bent on trying to justify yourself and prove yourself to be right - succeeding only in digging yourself deeper and deeper into the hole. If you want to carry on digging, I've a client with a new tractor that can help. BTW, he also has a number of £20kish vans, all owned outright but none of them - as far as I am aware - paid by cash on delivery.

So again, explained? No, NOT AT ALL. Nowhere have you even attempted to explain, or acknowledge,  the [subtle, but important] difference between "payment on delivery" and "an obligation that arises on delivery". No doubt you'll employ the same tactic as before and claim that you have already explained it, but refuse to indicate where - the tactic of he who has lost the argument. As is the tactic of claiming others' points to be an irrelevance.

To answer your first point, debate about perceived "subtleties" is counter-productive

If you really don't want to answer my point, that is up to you. But don't then claim to have explained anything.


Thanks (1)
17th Feb 2013 21:15


Listen to yourselves.

That is all.


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By Boycie
19th Feb 2013 20:34

Lost on me( and others too ?)

I am inclined to agree with Pottedbeef ! - first-rate putdown !  I haven't read all the comments in detail in this "thread" ( I think that is the right word, as I'm a novice on here) so I will not comment on the general points, although I am more persuaded by fawltybasil's views, which seem to hold water.  Basil  has explained his views  and I can't find anything to support BKD's  position, but possibly there is something which I have missed.  I do think that BKD should accept Basil's decision to draw a line under the matter, and I think you should both just agree  to differ ( so it is  bit out of order for BKD  to say that Basil will now "employ the same tactic" and "claim that have already explained it" - I can't  see where Basil has said that , but it does put doubt in my mind that you BKD have read Basil's posts properly as his post directed at you told you that he would NOT make any further comment !! !)

No, I really must ask BKD to explain a rather strange ( in my opinion) assertion, which appears in his last post and was indeed also included ( in slightly longer form) in an earlier post from him.  BKD  refers( twice ) to the "sloppiness" of Basil's comment that :-

" a trader buying goods is legally obliged to pay for them on delivery unless there are terms to the contrary in the contract".

You BKD  lambast Basil in your last post about this comment.    Clearly you are really determined not to  allow Basil to get away with what you believe to be  very "sloppy" comments about  aspects of a contract.     You do not say WHY you are sure that Basil's comment is so sloppy, ie whether  you are saying that it is an incorrect interpretation of the law of contract, or poor grammar/punctuation,spelling/syntax , or incorrect in a variety of ways - but I am sure that you must have two or three errors in mind, to be so condemnatory.   Unless I am very mistaken I suspect that some other readers of this "thread(?)" may share my surprise at your lambasting Basil about his interpretation of the law ( other readers will no doubt tell me about   five or six mistakes in Basil's words  !!).

  So BKD, please let me know what errors you have found in Basil's words,  and if they relate to the law of contract ( I can't really believe that you would be so critical if it was just say a grammtical error or two, although I can't find any !  ) then  please point me in the direction of the legislation which establishes Basil's misunderstanding of the law ( a "link" to the legislation would be very useful please, if you are able).

Thank you BKD in anticipation.




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19th Feb 2013 21:04


I already have, several times.

Let's see how you like it, Basil.

(sorry, was that a Freudian slip?)



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By Boycie
19th Feb 2013 22:05

Add-on to my last post.

    I meant to say on last post that I am interested in this legal matter as I had spoken to a friend who is also looking into it because he's reasonably sure that Basil is quite right about the wording even though BKD seems to think the opposite ( I am not an expert on grammar etc so I will pass on that one !).     So if anyone else can help with the legislation, please help me ( I suppose I could google contract law, and get there eventually !).    There might be budding lawyers on this site too possibly !      

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24th Feb 2013 00:01

Mod note

Folks, we've had to take down a few posts from this thread and it's got to a point where the community rules are being broken. Please remember that AWEB is a professional site and that off-topic & personal argument is not appropriate - it derails discussions and doesn't help the OP in any way. As a result of this, this thread is now closed. Please avoid making personal comments and remember to respect the author of the post's original question when replying.

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