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delaying AIA or is it WDA?

delaying AIA or is it WDA?

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I've inherited a client who bought a van in 2012-13 for £13k. They only claimed £4k AIA in 12-13, as claiming more would have taken there taxable income below the personal allowance. 

My question is now for 2013-14 what can they claim? my client is saying they were advised that they would be able to claim the remaining £9k AIA in 2013-14. 

Whereas I think that as the qualifying expenditure was in a previous period, they should only be able to claim WDA on the balance b/fwd of £9k. 

Opinions on what is correct please. 

Thanks

Replies (12)

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James Reeves
By James Reeves
08th Aug 2014 01:27

You are correct

The remaining 9K of unclaimed expenditure for the van will now be in the general pool (unless it has an element of private use) and can therefore be written down at 18% per year in subsequent years.

Your client has presumably misunderstood what his previous accountant told him - the 9K is certainly claimable, just not all in one year.  Claiming it last year would have just wasted it as you say.

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By raychidell
08th Aug 2014 07:37

Agreed

AIAs are only given for the chargeable period in which the expenditure is incurred (CAA 2001, s. 51A(2)).

Thanks (1)
Stepurhan
By stepurhan
08th Aug 2014 09:32

Advised by who?

Always worth checking where clients are getting this advice. Also, was this point simply raised as a query by them, or were they challenging your view? If they are taking advice from someone else over yours, then it might be time to go your separate ways.

As others have said AIA is only claimable in the the period of purchase. Not wasting capital allowances by limiting an AIA claim was still sensible though.

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By BananaMan
08th Aug 2014 10:27

"You can

"You can claim £9k in the future"

isn't the same as

"You can claim £9k next year"

 

Maybe they misunderstood?

Thanks (3)
RLI
By lionofludesch
08th Aug 2014 10:33

One Chance

You get one shot at AIA.  After that, you're on 18% of the balance. Who gave the advice ?  Bloke in the pub ?

Could be worse.  He could've been on cash accounting.

Thanks (1)
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By timp
08th Aug 2014 13:56

thanks for the replies all & confirming my opinion. 

 

I believe they were repeating what they had understood from the advice of their (now deceased) ex-accountant. So this could well be as BananaMan & James Reeves stated - misunderstanding of the advice they had received. 

 

thanks again

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By whopkinscom
11th Aug 2014 13:02

Losses carry back & fore?
Wouldn't the full allowance be claimed, causing a loss with option to carry back the loss to previous year (and reclaim c.tax for that year) and carry forward any remaining loss for following years?

That's what happened with my magic CT500 from IR.

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Replying to Jaydee UKBF:
Stepurhan
By stepurhan
11th Aug 2014 13:13

Not a company

whopkinscom wrote:
Wouldn't the full allowance be claimed, causing a loss with option to carry back the loss to previous year (and reclaim c.tax for that year) and carry forward any remaining loss for following years? That's what happened with my magic CT500 from IR.
The mention of limiting the claim to protect personal allowance in the question indicates this is not a company. Companies don't have personal allowances so there is usually no reason to not make a full AIA claim.
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By buttercup books
11th Aug 2014 21:20

"Could be worse. He could've

"Could be worse. He could've been on cash accounting" - sorry - why is that worse - ?

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By Steve Kesby
11th Aug 2014 21:23

It's worse because

You can't choose not to claim relief now and get it later

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Replying to richards1:
RLI
By lionofludesch
12th Aug 2014 13:15

Correct

Steve Kesby wrote:

You can't choose not to claim relief now and get it later

Correct, Steve.  If I was a gambling man, I'd wager on that to be the first change to the cash accounting régime.

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