Share this content

Capital allowance

Capital allowance on assets came with business purchased

Didn't find your answer?

I recently bought a business which consists of assets and value for goodwill. I simply paid a single price for the whole business. Can I claim capital allowance on any of my costs?

Replies (8)

Please login or register to join the discussion.

Psycho
By Wilson Philips
06th Aug 2021 11:31

If you have paid for equipment to be used for the purposes of your business, what makes you think that you can't claim capital allowances?

Your only issue is determining how much of the price paid relates to that equipment. Any properly drafted agreement would have set out the respective elements.

That's the short version - there may well be a host of other factors that might determine the extent to which allowances are available.

Thanks (0)
avatar
By Paul Crowley
06th Aug 2021 13:05

Who bought what from whom?
You say you are a director. Did your company buy it?

Thanks (0)
RLI
By lionofludesch
06th Aug 2021 13:20

Bit late now, but you need to agree an allocation with the vendor.

Unfortunately, you've placed him in the box seat for these negotiations.

Thanks (1)
avatar
By DKB-Sheffield
06th Aug 2021 15:15

This is a duplicate post - why? Your questions are fundamentally the same.

Confirm what you bought (a website, a pub, a client list) and what the sale agreement stated. It should give a breakdown of what is purchased with allocated values.

You may be surprised to find the vendor valued the assets at £1 to avoid balancing charges against previous AIA claims. Don't be surprised, it's not unusal - particularly where property fixtures are concerned.

The answer to your question, without further information, is "yes" you should be able to claim capital allowances.

The problem/ issue is how much, and on what? Your question does not allow for further speculation on this matter

Thanks (0)
Replying to DKB-Sheffield:
avatar
By David Ex
06th Aug 2021 16:24

DKB-Sheffield wrote:

This is a duplicate post - why? Your questions are fundamentally the same.

Confirm what you bought (a website, a pub, a client list) and what the sale agreement stated. It should give a breakdown of what is purchased with allocated values.

Should but doesn’t according to the duplicate post which says “no advice taken and agreement doesn't specify anything”.

Sadly looks like a bit of an omnishambles.

Thanks (0)
Replying to David Ex:
avatar
By DKB-Sheffield
06th Aug 2021 18:57

I never understand why anybody would buy a business (or anything) without detailed formal paperwork - let alone an accountant in practice who really should know better (as the OP is according to previous posts)!

@OP - I think your only avenue here is to approach the vendor. Find out the value and/ or tax position of the assets. If the vendor has valued the assets at £Nil on sale, and has written them down on his side, you may well be stuck with that. Getting the vendor to backtrack is unlikely to bear fruit!

All very messy!!!

Thanks (0)
Replying to DKB-Sheffield:
Psycho
By Wilson Philips
06th Aug 2021 19:09

I’m not sure that the vendor’s treatment is of any relevance. If the agreement is utterly silent on apportionment it is up to each party to make a reasonable apportionment.

If you were being asked the same question by the vendor (what figure to use for disposal proceeds) what would your answer be?

Thanks (0)
Replying to Wilson Philips:
avatar
By DKB-Sheffield
06th Aug 2021 20:56

Good point well made.

If advising on this, and before giving any advice (to vendor or purchaser) I would wish to know two key facts:

1. What has been sold? Thus far we know this is a business with plant & machinery. Is this and accounting firm with a computer & desk? Is it a pub with embedded/ pooled fixtures & fittings? Is it a vehicle recovery truck with little repeat custom/ goodwill? We simply don't know.

2. Who sold it? Were they a connected party? Whilst I have assumed not, I don't recall this being stated verbatim.

Clearly there are many more matters to consider but, unless the above 2 are known, I can't see how advice can be provided.

Thanks (0)
Share this content