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Capital allowances - s5 CAA 2001

Capital allowances - s5 CAA 2001


I have a client who installed air conditioning units in March of this year and has a 30 April 2012 year end. They have not been invoiced for this. The client wants to claim capital allowances on this in 2012 and is wanting to know if a payment can be made now to obtain this relief.

I understand that under section 5 of CAA 2001 that the basic rule is allowances are available when an unconditional obligation to pay arises. The exemption to this rule is when more than 4 months elapse between the date of the unconditional obligation, such as delivery date and the payment date under the legal contract then expenditure is treated as incurred when the legal obligation arises to pay not the delivery date.

The client has not been invoiced for this and after further questions has no legal contract, so when does the unconditional obligation arise for the client to claim allowances?

Many thanks in advance.


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29th Jun 2012 00:38

Not sure but....

I would have thought that there is a legal contract here, it just isn't on paper, I'm sure the price was discussed before installation took place, a verbal contract is just as legal as a written one just harder to prove.  However your client has the goods installed, this has to be good evidence, did they have to sign anything on installation? Who are these people lol.

I'm sure someone more versed in the wheres and whyfors will come forward soon.



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By plummy1
02nd Jul 2012 13:37

Legal Contract

Mtf is correct there does not have to be a written contract. If I remember my contract law correctly then there has to be:-

i) An Offer

ii) Acceptance

iii) Consideration (The Price)

iv) Intention to create legal relations 

v) Capacity (Authority to enter into the contract)


I suspect al of these exist in the above in some form. Acceptance can even be letting the company onto the site to undertake the work. As your client wants to claim capital allowances he obviously has accepted the work and is aware of the price.

I don't see any problems here in terms of their being a contract.





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