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Can I claim unclaimed writing down allowance

Client has not claimed wda for 4 years. Can I claim for each year this year or am I restricted

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My client has not claimed wda for 4 years due to using losses brought forward to minimise the tax charge. Can she now use the 4 years of wda not claimed to minimise this years charge or is she restricted to one year. If there is a restriction is it possible to go back and restate the self employed losses in previous years by using the wda and hence increasing losses brought forward and if so for how many years can this be done.

Replies (21)

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Psycho
By Wilson Philips
05th Jul 2020 11:50

You can claim for the current year only, on the pool balance b/fwd. You can amend previous returns subject to the usual time limits.

Thanks (1)
By Tim Vane
05th Jul 2020 12:44

It rather sounds like you have taken over this client from an accountant that knew what they were doing, since their approach has been correct. Amending an earlier year would almost certainly be the wrong thing to do. You have asked 3 very basic questions that nobody in public practice should need to ask.

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By SXGuy
05th Jul 2020 13:34

If there were losses. They have to be used. Hense why CA weren't.

Suggest you do some reading up as others have said. It's basic stuff.

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By Paul Crowley
05th Jul 2020 14:12

Did you try this and did your software permit you to do this?

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By carolelmcarre
05th Jul 2020 14:23

Thanks for this. I had prepared the accounts etc myself and used Aia for all current in year spend. This query related to plant integral to a building and I had not previously claimed it as I was not aware of it before.

As it has been many years since I used the wda for most clients, only choosing to use it when there was a likelihood of a significant balancing charge on aia within a few years, I had wondered if I had missed any opportunity to "catch up' on unused ads allowances. Many thanks to all. As you say, basic stuff....but sometimes so basic opportunities get missed. In fact that was the case for me with the integral.plant!

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Replying to carolelmcarre:
By Tim Vane
05th Jul 2020 23:22

carolelmcarre wrote:

Thanks for this. I had prepared the accounts etc myself and used Aia for all current in year spend. This query related to plant integral to a building and I had not previously claimed it as I was not aware of it before.

So, just to be clear, you have always claimed AIA for all your clients, regardless of whether they have made profits or losses and regardless of the size of those profits or losses?

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By AWeb72
05th Jul 2020 19:28

(facepalm)

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RLI
By lionofludesch
06th Jul 2020 03:38

You can claim capital allowances to increase a loss.

Whether that's a good idea depends on factors you don't disclose.

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Replying to lionofludesch:
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By Tax Dragon
06th Jul 2020 06:40

There may be legislative (as opposed to mathematical) restrictions on the use of the CA element of the loss - though, as you say, that doesn't prevent the CA claim being made.

In fact, if there is a legislative restriction, I'd hazard a guess that it's sensible to claim the CAs more frequently than not.

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By carolelmcarre
06th Jul 2020 08:30

Beginning to wish I hadn’t asked this...and have to say I find the tone of one respondent really rather unhelpful. Just to be clear. I have been qualified as a chartered accountant for over 30 years, working in my own small practice which I am running down now for several years, previously not in practice. Re capital allowances, in circumstances where it would not be useful to increase a loss I do not claim any. In circumstances where, for example buying a van which may well be sold within a short space of time generating balancing charges for a small client I would take or not take a wda allowance depending on circumstances. But, for the majority of my current clients (all small) the best outcome for them is secured using the Aia route. I usually research options thoroughly, and, I believe, deliver an excellent and personal service to my clients. However...having had a fairly quick look at the HMRC manuals, and and also very quick look at Bloomsbury, I had a brainwave...why not just ask the supportive group at AccountingWeb. So posted a quick request which has generated helpful replies. My fault here lies in the speed with which I asked the question and added a second ....oooh what about that too....not a mistake that I will be repeating in a hurry. Many thanks to those respondents who did not seek to belittle and insult me,. Suffice to say that, in the years that I have been practising as a sole accountant I have sometimes found that there are unexpected and sometimes obscure tax rules that can significantly alter the outcome arising from a course of action. As I noted in my earlier response, the ability to claim cas for integral plant was one of these. Of course, it could simply be that I am suffering from early stage Alzheimer’s brought on by lockdown, age, and Brexit.

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Replying to carolelmcarre:
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By Tax Dragon
06th Jul 2020 08:53

The first response answered your question. There was no need that I can see for any further responses. But on an open forum, you'll always get that.

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By Tim Vane
06th Jul 2020 08:49

That’s all very fine and dandy BUT your inexperienced and lack of understanding, however well intentioned, are causing problems for your clients. First you are treating losses incorrectly and thus submitting incorrect tax returns. Secondly you are, as a result, claiming Capital Allowances that it is not on your clients’ best interest to claim. And that’s just the errors that can be seen from your posts here. Quite frankly you should arrange to consult with an experienced practitioner who can identity the issues and help you find solutions to some of the problems you have created.

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Quack
By Constantly Confused
06th Jul 2020 08:52

For the benefit of new users to this site, could existing users perhaps define exactly what constitutes a legitimate question? I keep getting told this site is for professionals only but I'm beginning to see there is a further requirement to only ask questions the regulars don't consider to be obvious.

I appreciate the point that if one is practising one should know the answer to basic issues (which I agree this is; unless of course the OP has always had profitable clients and their knowledge of restricted CAs has lapsed to the point they have become uncertain on their knowledge - the last time I needed to restrict a CA claim was... years ago at least, and likely the time before was a year or two before that. Guess what? I spent some time double checking the rules as I was rusty and things change when you don't watch them), but all this thread (and the dozens of similar ones) is doing is making sure any new users who see it will think twice before asking a question in case they get abuse. I really hope they don't make a mistake and devalue the profession because they were too scared to ask a question on a forum designed for them to ask questions on...

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Replying to Constantly Confused:
Oaklea
By Chris.Mann
06th Jul 2020 13:54

Agree Constantly Confused - The forum risks becoming aloof and restricted to only those who ask questions, which meet the approval of the few. If that scenario is allowed to persist, as you say, many potential new members will remain closeted through fear of ,making enquiries, which appear to some, to be elementary.

As far as I am aware it isn't essential to comment? And I didn't know that the forum was the equivalent of Ofsted? Let's be clear, for a variety of reasons, we've lost many exceptional contributors, on this forum, over the last few years, for a variety of reasons. One is clearly quality of moderation/forum design. If we are not very careful, the core membership will become a clique. Whilst I'm personally not fussed whether I take part or not, I have a fairly short fuse, when I'm insulted.

Thanks (3)
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By paulwakefield1
06th Jul 2020 09:26

There are some who would rather attack an OP for showing the slightest gap in their knowledge (real or assumed by the responder), writing too short a question, too long a question, having the audacity to ask for advice, asking a very precise question on a specific narrow point without a lot of background, asking a question which can be perhaps deliberately misinterpreted than answer the question even with caveats.

I don’t “do” tax but I like to refresh my knowledge and learn new things. I know a little bit of the answers to the above, I can guess at some of the rest. Like CC above, I can’t remember the last time any of my clients would have benefited from restricted CA. It would be good if the issues could be spelt out and the answers. In the bemoaned old days on this site, those are the responses that would have been posted.

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Replying to paulwakefield1:
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By Tax Dragon
06th Jul 2020 10:00

To my mind it depends on the question.

With one like this, Wilson's approach of a direct answer to the specific question seems (to me) entirely appropriate. There is no reason I can see publicly to question the ability of the questioner. In doing so, Tim is making some (I think) unjustified assumptions. That said, if (but it is an if) the assumptions are correct, then the OP (and her clients) would benefit from taking Tim's advice.

With some other questions though, there is no room for doubt but that the OP should buy in help on/refer the client to someone else to help with the situation at hand. With those questions, I personally think Wilson's approach is unhelpful.

Perhaps if we all (all includes me) thought a bit more before we posted - whether that's a question or an answer - we could start getting this forum moving the right way again, while we wait for Sift to make its changes.

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Replying to paulwakefield1:
RLI
By lionofludesch
06th Jul 2020 10:46

paulwakefield1 wrote:
Like CC above, I can’t remember the last time any of my clients would have benefited from restricted CA.

It boils down to "can you use the loss ?"

Or were personal allowances covering the profits anyway ?

If your profits are £12000 and you buy a £10000 van, why would you claim AIA and report £2000 profits ? Better to claim nothing and have the benefit in later years.

With losses, it depends on your loss options. The most difficult is carry forward. You must use them against the first available profits so your first question is "will profits exceeed £12500 next year?". The next is "by how much ?" If you expect £15000 and already have £5000 of losses, there's no point in claiming capital allowances. Better to carry them forward.

Every case has its own right answer. There are no generalisations.

What I wouldn't do, though, is not claim AIA because there might be a balancing allowance in a couple of years' time. There might be situations where I'd consider it - a taxpayer sailing close to the higher rate/HICB threshold, perhaps - but there'd have to be more to it that just avoiding a balancing charge. For one thing, there may be no balancing charge.

Oh - and don't forget to claim your losses against Class 4 NIC.

Thanks (1)
Replying to lionofludesch:
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By paulwakefield1
06th Jul 2020 11:13

Thank you Lion. That was useful - I was broadly on the right track with my thinking. Since my clients are corporate, I hadn't fully thought through the s/e implications for future years.

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Replying to paulwakefield1:
RLI
By lionofludesch
06th Jul 2020 11:17

paulwakefield1 wrote:

Thank you Lion. That was useful - I was broadly on the right track with my thinking. Since my clients are corporate, I hadn't fully thought through the s/e implications for future years.

There was a discussion about corporates a few years ago. There are a few circumstances where it can be advantageous to reduce your claim but they are highly unlikely to occur in practice.

Always claim in full for corporates.

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Replying to lionofludesch:
Psycho
By Wilson Philips
06th Jul 2020 11:20

Especially true in light of current CT loss rules.

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By SteveHa
06th Jul 2020 16:59

Even though I knew the answer, only being QBE (40 years of), I am apparently not worthy to answer.

https://www.accountingweb.co.uk/any-answers/time-to-talk-about-unqualifi...

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