Capital allowances post dating...

I have a customer who want to buy a demonstrator machine, but want to take the cap allowance in 2018

Didn't find your answer?

We will have to take delivery and pay for the machine in January 2018, meaning a hp agreement would have to be signed, the customer has already used a lot of his allowance and this machine would be 75% of next years, apologies if it's a stupid question but this machine has a saving of £50k.

thanks, Richard 

Replies (11)

Please login or register to join the discussion.

RLI
By lionofludesch
24th Nov 2017 19:27

Your question is as clear as mud. In fact, I can't find one.

You are some intermediary, I take it ?

Why do you need to buy this on HP - or indeed at all - if the customer doesn't want to buy it until next year ?

When is his year end ? December ? Or next October ?

How much is this machine ? Somewhere in the region of £250,000 ?

If you weren't so vague, we might be able to offer some sensible comment.

Thanks (1)
avatar
By Richard Shrops
24th Nov 2017 19:52

Apologies, I am an agricultural machinery supplier, the machine will be sold at approx £160,000.
The machine is available for me to buy from the manufacturer and has a significant saving over new. The customer is splitting a partnership, so want to take the full tax allowance available, I am stuck between the supplier wanting to seek the machine asap, the customer not wanting an invoice until April and me not wanting to wait 3/months for payment..., I hope that helps...and thanks in advance, best Regards, Richard

Thanks (0)
Replying to Richard Shrops:
paddle steamer
By DJKL
24th Nov 2017 20:02

Does supplier sell to end customer rather than to you?

Could supplier accept invoice to customer in January but not being paid for over 4 months?

"There is an exception to the general rule. If there is a gap of more than four months between the dates on which the obligation to pay becomes unconditional and the date on which payment is required to be made the expenditure is not incurred until the date on which payment is required to be made."

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11800

Thanks (0)
Replying to Richard Shrops:
RLI
By lionofludesch
24th Nov 2017 20:13

Richard Shrops wrote:

Apologies, I am an agricultural machinery supplier, the machine will be sold at approx £160,000.
The machine is available for me to buy from the manufacturer and has a significant saving over new. The customer is splitting a partnership, so want to take the full tax allowance available, I am stuck between the supplier wanting to seek the machine asap, the customer not wanting an invoice until April and me not wanting to wait 3/months for payment..., I hope that helps...and thanks in advance, best Regards, Richard

How much risk are you prepared to accept that the customer will change his mind ?

You could be stuck with this machine.

Another option - the customer could change his company's year end to, say, December 2017.

I'm a bit baffled by your question, really. It's not your problem, it's one for the customer and his advisors to resolve. Appreciate you're trying to help but you'll never have enough information to resolve this for the customer.

Thanks (0)
Replying to lionofludesch:
avatar
By Richard Shrops
24th Nov 2017 20:20

Thanks for your help, I'm just trying to help the deal along as it would supply me with service work for 5 years and there would be a reasonable profit within the deal for me.
The concern for me is that I would be stuck with the machine. Thanks for your help once again

Thanks (0)
By Ruddles
24th Nov 2017 20:16

Simple - if he’s buying it on HP, he just puts the machine into storage and doesn’t bring it into use until he wants to crystallise the allowance.

Thanks (0)
Replying to Ruddles:
paddle steamer
By DJKL
24th Nov 2017 20:18

Depends when in the farming calendar it is needed, being a somewhat seasonal business.

Thanks (1)
Replying to DJKL:
avatar
By Richard Shrops
24th Nov 2017 20:23

It would be used all year round...

Thanks (0)
Replying to DJKL:
By Ruddles
24th Nov 2017 20:33

Indeed. If there is no flexibility over timing of purchase and use, the advice above is the best - change the year-end (though depending on dates, he may find this year's entitlement restricted).

Thanks (0)
Replying to Ruddles:
RLI
By lionofludesch
24th Nov 2017 21:00

It depends on whether the somewhat imprecise "a lot" amounts to more or less than 75% of his current entitlement.

Thanks (0)