Capital Allowances Deadline

Can I claim Capital Allowances on an item purchased 2 tax years ago?

Didn't find your answer?

Hi all

For a Limited Co, an item was purchased in 2016/17 tax year.

No AIA or Cap Allowances were claimed as the Co. was in loss that year and the following year.

The item is still being used for business purposes.

Can Capital Allowances be claimed in the tax year 2018/19?

Thanks

Replies (19)

Please login or register to join the discussion.

By johngroganjga
30th Sep 2020 13:53

Companies claim capital allowances by reference to the periods they prepare their accounts for. Tax years, as you put it, don’t come into it.

Was the decision not to claim capital allowances in the year of purchase taken by the accountant who prepared the company’s accounts for that year? If so, why not ask them what to do now?

Thanks (0)
Replying to johngroganjga:
avatar
By Finding Accounting
30th Sep 2020 14:42

I meant tax year for the particular company (so their accounts period).

I was asking HERE what are my options now... isnt this the purpose of this section of AW?

Thanks (0)
Replying to Finding Accounting:
By johngroganjga
30th Sep 2020 16:15

Finding Accounting wrote:

I was asking HERE what are my options now... isnt this the purpose of this section of AW?

No it certainly isn’t. It’s for accountants to ask questions of each other. It’s not for clients who for reasons best known to themselves don’t want to do the obvious and ask their own accountants.

Thanks (0)
Replying to johngroganjga:
Psycho
By Wilson Philips
30th Sep 2020 16:22

Did you not bother to check out the OP's posting history before diving in feet first?

Thanks (0)
Replying to Wilson Philips:
avatar
By Tax Dragon
30th Sep 2020 16:45

TBF, "can I claim" sets up the wrong impression and when followed by the query (and further followed by the snotty-nosed reaction to John's comment), I was with John all the way (until your intervention).

Thanks (0)
Replying to Wilson Philips:
avatar
By 356B
30th Sep 2020 16:51

It's difficult to dive in feet first, but it looks like John managed it.

Thanks (1)
avatar
By Geoff56
30th Sep 2020 14:12

Yes. The item is brought forward at cost but you can only claim a writing down allowance. The opportunity of claiming AIA has gone.

Thanks (1)
Replying to Geoff56:
avatar
By Finding Accounting
30th Sep 2020 14:45

I am aware that I cannot claim AIA, but wan't sure If I could claim WDA for the first time 2 years after the cost occurred.
Thanks

Thanks (0)
Replying to Finding Accounting:
avatar
By Geoff56
30th Sep 2020 15:24

The item is added to the plant and machinery pool in the year of acquisition (assuming we are talking about P&M). The fact that no allowances were claimed for a couple of years, does not affect in anyway, your entitlement to claim WDAs in subsequent years.

Thanks (1)
avatar
By Wanderer
30th Sep 2020 20:51

Finding Accounting wrote:

No AIA or Cap Allowances were claimed as the Co. was in loss that year and the following year.

Struggling to understand why that should be a reason not to have claimed?
Thanks (0)
Replying to Wanderer:
Psycho
By Wilson Philips
30th Sep 2020 21:18

It might have made sense before 1 April 2017. (Which, based on the question, might have been the case.)

Thanks (0)
Replying to Wilson Philips:
RLI
By lionofludesch
30th Sep 2020 23:29

I recall a debate on this several years ago where we (or, rather, other members) identified a handful of scenarios where it would be beneficial to refrain from claiming.

They all seemed very obscure to me.

Thanks (0)
Replying to lionofludesch:
Psycho
By Wilson Philips
30th Sep 2020 23:38

One, not particularly obscure, scenario:

Company is (was) loss-making but had potential for profits/gains from other sources. Defer capital allowances to maximise sideways relief.

Plenty of other non-obscure reasons, not involving losses.

Thanks (0)
Replying to Wilson Philips:
avatar
By Wanderer
01st Oct 2020 05:25

Understood, however generally giving up 100% IAs to claim much lower WDAs over a number of later years would be an unusually beneficial scenario, particularly for a company.

Also the OP said that this was due to "Co. was in loss that year and the following year" & made no mention of later, other income for sideways relief.

Further, as you mention, rules changed 1 April 2017 so why nothing claimed for 'the following year'?

Thanks (0)
Replying to Wilson Philips:
RLI
By lionofludesch
01st Oct 2020 06:00

Tbh, Wilson, I'd consider that obscure.

It might benefit one in a hundred companies, if that, and would require foresight. Unlikely to be worth giving up your 100% AIA to gain an extra few % in loss relief.

Thanks (0)
Replying to lionofludesch:
avatar
By Tax Dragon
01st Oct 2020 07:24

But, silly you, you're thinking the company is carrying on the trade for profit.

Wilson's company is instead expecting to continue making losses (and do so in such a way that offset of those losses isn't blocked).

(I say is... I mean was. All fairly academic now.)

Thanks (0)
Replying to lionofludesch:
Psycho
By Wilson Philips
01st Oct 2020 08:14

Whatever. We actually had a number of clients that used to disclaim allowances for that very reason as well as others - preservation of charges on income, utilisation of double tax relief etc etc. I guess the question of obscurity depends on the nature of your client base.

It wasn’t a case of giving up 100% in order to gain a few % later on. It was more a matter of effectively giving up 0% (with allowances otherwise being lost) to preserve a few % later on - remembering always that capital allowances are always a matter of timing.

Thanks (0)
Replying to Wilson Philips:
avatar
By Piltdown Man
01st Oct 2020 15:33

Wilson Philips wrote:

remembering always that capital allowances are always a matter of timing.


Except of course, when they are not!
Thanks (0)
Replying to Piltdown Man:
Psycho
By Wilson Philips
01st Oct 2020 15:45

Indeed ;¬)

Thanks (0)