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Capital Allowances

Asset bought in 2015 that had not been included in the CA comp

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It has come to light that a client had not received capital allowances on an asset they purchased in 2015, this asset has subsequently been sold in 18-19, which the accounts have not yet been drawn up. 

Would you agree that the most appropriate way to account for this is to deduct the total CA’s that would have arisen had the asset been included in 2015?

The client only made a small profit in that year, so it might have been added to the pool as opposed to full AIA.

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RLI
By lionofludesch
31st Aug 2019 13:17

Claims for Capital Allowances are optional so, imho, the asset's cost should be added to the pool at the beginning of whatever period you mean by 18-19 and the sale proceeds deducted in that year.

AIA is, of course, lost but the client should get a writing down allowance or, possibly, a balancing allowance. The query is too vague to say.

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