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Can anyone help with capital allowances?

I am unclear how to account for sale of assets on a tax return for a business that's ceased to trade

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Specifics are as follows:

Small Partnership self employed VAT registered business ceased to trade. So assets were sold off.

Sale of main pool assets (multiple items) for a net total of £4407.67

0050 nominal sitting at £11896.01 (total for multiple items)

Accumulated depreciation is £8713.36

Creates a profit on disposal of £1225.02

Main pool writing down allowance carried forward from tax year ending 31/03/18 - £1329

I am unsure how to account for these figures in both the closing down accounts and on the partnership tax return boxes 3.17-3.23

Can anyone help clarify please?

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By zebaa
22nd Jul 2019 20:40

If it is selling stuff, then it has not ceased trading.

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to zebaa
22nd Jul 2019 20:55

No longer selling stuff, this was capital assets sold off when business ceased to trade its business to public. Everything that could be sold was sold off, other items scrapped. Business closed down and gone completely now.

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By JoF
to SpeedyGirl755
22nd Jul 2019 21:05

Why did you change your post to anonymous after it was published?

There are rules for anon posting!

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to JoF
22nd Jul 2019 21:15

Never used this site before apart from reading stuff, didn't realise it was going to put company details out there for all to see!
I was really hoping to get a helpful response from people rather than criticism and unhelpful comments though

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to SpeedyGirl755
22nd Jul 2019 21:27

You’ve already dealt with the accounting - your profit on disposal is simply a profit and loss account credit (but needs to be ignored when calculating the tax-adjusted profits)

For capital allowances, the difference between proceeds and tax value brought forward is a balancing charge

In simple terms, to arrive at your taxable profits, you take your accounts profit, deduct the profit on disposal and add the balancing charge

There are of course likely to be other adjustments (depreciation, private use etc - which private use might also affect the amount of balancing charge to account for).

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to Wilson Philips
22nd Jul 2019 22:02

Thanks very much, this helps a lot.

Can I also just ask, when you say the profit on disposal needs to be ignored for the tax-adjusted profits, does that mean that it needs to move out of the overheads section of the P&L where it is currently sitting which is altering the net profit figure?

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to SpeedyGirl755
22nd Jul 2019 22:09

No it’s probably in the correct place in the accounts.

It’s simply one of the adjustments that need to be made in arriving at the taxable profits.

To be honest, if you’re struggling with what is to accountants a very basic issue you would be better to leave things in their hands. I would be concerned that there may be other aspects that you are not handling correctly.

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to Wilson Philips
22nd Jul 2019 22:23

Thanks very much, I've had some confusing information regarding treatment of these figures and wanted some clarification before sending it all on to the accountants, who going on previous years would have charged us extra again to sort out these figures

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to SpeedyGirl755
22nd Jul 2019 22:26

Quote:

Never used this site before apart from reading stuff, didn't realise it was going to put company details out there for all to see!
I was really hoping to get a helpful response from people rather than criticism and unhelpful comments though

Helpful response.

The site can only make available details that you provide it. The answer is to not provide details you don't want in the public domain. It is NOT to switch to anonymous becuase you want to use a FREE resource without any responsibility for what you have posted.

If you think I am being a bit harsh, I suggest you search through the site history for obvious freeloaders whose actions are indistinguishable from yours.

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22nd Jul 2019 21:44

What's nominal code 0050 ?

How are we to know what software you're using ?

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to lionofludesch
23rd Jul 2019 07:21

Looks like the default Sage fixed asset code for Motor Vehicles.

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to paulhammett
23rd Jul 2019 09:39

The arrogance of Sage users is unbelievable.

They cheerfully quote nominal codes without even mentioning that they're using Sage.

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By SXGuy
to lionofludesch
23rd Jul 2019 10:31

lol that did make me laugh, it does appear as though sage users seem to think its the be all and end all, of accounting packages.

My wife was the same, a management accountant, always quoting nominal codes like they were gospel in the accounting sector.

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