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Demonstrator boat and capital allowance

Does a demonstrator boat qualify for capital allowance (I think not, client disagrees)

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Hi all,

Quick question. I have a client who sells boats (small leisure craft, not Sunseekers). In the year he enter into a distribution arrangement with a manufacturer to sell their boats. He has bought one of the boats as a demonstrator boat. My understanding is that this boat is mainly used for doing demonstrations, but could also be sold at any point.

From my understanding of the parallels with the motor industry, demonstrator cars are treated as stock and held on the balance sheet as such. No capital allowances are claimed.

With the advent of the superdeduction my client is trying to argue that the boat should be eligible for capital allowances. I disagree as it is stock and stock is not eligible for capital allowances.

Has anyone else seen demonstrators (probably in the motor industry) claim capital allowances? If so what was the justification for doing so?

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By 356B
01st Oct 2021 15:58

Not sure that it qualifies as Plant and Machinery anyway.
It's his choice as to whether it's treated as an asset or stock. Plusses and minuses either way. Much simpler as trading stock.

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By Bobbo
01st Oct 2021 16:08

I imagine car dealerships treat demonstrators as stock because they're not held for that long, so it's a bit of use before realising the value of it by selling it.

How long does your client envisage holding the demonstrator boat?

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