HP Agreement

Treatment of new car for CA's

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I appreciate that claiming for capital allowances on a vehicle under HP has been mentioned numerous times before:-

https://www.accountingweb.co.uk/any-answers/capital-allowances-on-hp

I would like to check whether a car purchase which has been made under a document clearly marked "Hire Purchase Agreement" qualifies for CA's if there is a PCP mileage clause mentioned if the car is handed back and the balloon payment not made. I am aware that CAs could be claimed on a car under HP, but it's if the mileage clause alters the claim that I want to check. I am familar with the CA rates etc.

Thanks for any assistance.

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By Portia Nina Levin
04th Aug 2017 15:43

Does the contract provide that the purchaser shall or may become the owner of the car, and does the contract fall to be treated as a finance lease under GAAP?

If you have two yes reponses, then all of the payments under the contract are treated as made when the car begins to be used for the purposes of the business.

CAA 2001, s 67.

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Replying to Portia Nina Levin:
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By possep
04th Aug 2017 16:03

Thank you. Certainly the contract stated that the purchaser would become the owner on payment of the balloon payment. I'll check this further. Much appreciated.

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