Hi there,
I am really struggling with filling our company accounts due to the balancing charge on van disposal. Can anyone please confirm the following entries are correct?
We bought a van in 2019 for £1,170 and claimed AIA in full. In 2020 we sold the van for £500. In the accounts we have a loss on disposal of £432 (£1,170 less depreciation of £238 less £500). When filling the company accounts this amount is included in other charges (box AC425), then in profits/loss on disposal on assets (box CP33) and then added back to the company's loss in the adjustment section (box CP51).
Am I correct saying that the proceed of £500 needs to be added to the loss in the balancing charges in CP672 'total proceeds from disposal from main pool' since full AIA was claimed?
Replies (5)
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It doesn't matter that AIA was claimed - you need to reflect the £500 proceeds in your computation. Whether or not you have a full balancing charge of £500 will depend on whether you had any residual expenditure (from other assets) in the pool.
The van remains the van in the accounts and the profit/loss is the difference between carrying value and sale value, this is added back on the tax comp so it has no bearing on taxable profit.
In the tax comp the van ceased to be the van once you put it in the general pool. From that point on anything you do you do to the pool, so the £500 proceeds adjusts that figure, which may or may not produce a balancing charge.
I am not sure if the £500 goes to box 700 or 730 on CT600.
My vote is for neither.
But I'll help you out - it doesn't make any difference.