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Capital allowances and insurance proceeds

Capital allowances and insurance proceeds


An asset sustained fire damage, the client received insurance proceeds but later decided to sell the asset. I need to determine what would influence the capital allowances position of this event and questions I need to ask the client.

I understand that permanent loss or destruction triggers a disposal event for CA's at the date the asset was lost and disposal to a third party. But I am I right in thinking that this would trigger two disposals? Then would the new asset be treated as an addition? If the insurance proceeds were not used in repairing or buying a new asset does that lead to a different treatment for CA purposes?

Any thought's would be helpful. I can't seem to find anything!

Many thanks!


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29th Jun 2012 16:04

Forgive me sounding a bit dense...

... but if the asset was destroyed, how did it come to be sold?

I'd say that your disposal event was a sale within item 1 of the table in S.61(2) CAA 2001.

If you think you've genuinely got two disposal events, then read S.60(3).

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to QuentinPain
29th Jun 2012 16:26

Missed a point out...

Sorry I must have missed the point out, they received insurance proceeds but we do not know what they did with this, they did purchase a replacement but we do not know if they repaired the damaged asset and then sold it as a whole or just the bit that was not damaged by the fire. If that makes sense?

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29th Jun 2012 18:09

I think you had better ask the client don't you?

You seem to be lacking facts rather then knowledge of the law.

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