Is AIA available on a qualifying asset that is purchased and disposed of in the same accounting period? I don't seem able to locate any suitable guidance.
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Allowances due
But they are due because the difference between cost and disposal proceeds produces a balancing allowance. The question is probably academic, but if you have other purchases that us the aia in the year I cannot see how HMRC could stop you claiming the balancing allowance as well
Balancing Allowance
The difference between the WDV of an asset and the sum realised when the sale price is less than the WDV. It is set against profits as part of Capital Allowance claimed.
I know exactly ...
... how a balancing allowance is calculated. Just intrigued as to the apparent misunderstanding of the circumstances in which a balancing allowance arises. Generally speaking, disposal proceeds are deducted from the pool of qualifying expenditure - no balancing allowance arises until cessation of trade. There are of course special rules in respect of expensive cars, short-life assets etc
Duh! Schoolboy error
- no balancing allowance arises until cessation of trade. There are of course special rules in respect of expensive cars, short-life assets etc
Note to self...Don't do posts on Accountingweb the morning after the night before!
@Paula
Even more importantly, don't do posts on Accountingweb the night before! I've made that mistake on more than one occasion only to be appalled at the gibberish and mis-information the following morning
AIA/Disposal
AIA is available on the acquisition subject to the asset qualifying and the annual limits. This brings the pool back to its written down value before the specific acquisition. The disposal proceeds are deducted from this written down value. If the answer is positive, WDAs are available. If the answer is negative, a balancing charge arises and the pool goes back to zero.
Balancing allowances are only relevant on the cessation of a trade or where there is a separate pool for whatever reason.
Prove a negative?
You won't find any such legislation - what you need to do is ask your partners to cite the legislation that says AIA would not be allowable. Again, they won't find it - because it doesn't exist.
Thinking aloud after a night of little sleep
could you not add it to a short life pool to avoid the general pool "problem" and claim the BA?
SLA
could you not add it to a short life pool to avoid the general pool "problem" and claim the BA?
Yes, but given that the question was about claiming AIA, how would that help?
@BKD
It would save the AIA for something else by getting a full deduction as a BA was my lateral, and rather sleep deprived thoughtcould you not add it to a short life pool to avoid the general pool "problem" and claim the BA?
Yes, but given that the question was about claiming AIA, how would that help?
Legislation
I'm not sure that specific legislation is relevant or needed. We've had allowances against current year profits for new acquisitions for a long time now. They've varied between 40%, 50% and now 100%. Statistically balancing charges used to be unusual since there was invariably something in the pool.
The position is further skewed by the facility to write off pools of less than £1,000.
I think we'd all be curious as to how your partners wish to deal with the matter?!