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company about to lose property deposits

tax and accounting treatment

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Hi

Company paid £125k (50%) reservation deposits for flats being constructed (to rent out on completion) in y/e 31/10/17 and those deposits were recognised as land & buildings (FA). Now the company is likely to lose the deposits as the constructor has gone in liquidation in Jan-2019 (currently in liquidation). We are finalising the accounts for y/e 31/10/18. How do we treat this in the accounts (micro accounts under FRS105) and for tax purposes? Post-balance sheet event disclosure? What will be the impact for corporation tax? Thanks for the help.

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12th Jul 2019 06:47

It's a capital expense not deductible from income. Whether there's any relief at all depends on whether the company has acquired anything, which isn't clear to me from your summary.

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12th Jul 2019 07:20

You will want to include a note on your file about s144 TCGA, if nothing was acquired.

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12th Jul 2019 07:54

In your Oct 18 accounts, I’d leave it as a FA. It’s the Oct 19 accounts when it needs dealing with. I’d’ve said w/o to exceptional items with no CT relief which is a double kick in the teeth. Others will be better placed to know the correct CT treatment. I’d’ve come on here to ask it!

I’ve got a feeling that PBSE notes don’t appear in FRS105 accounts, maybe wrong though.

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