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Loss on dispoal

Morning I have a situation where a sole trader, a chauffeur is about to dispose fo his expensive ca

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Morning

I have a situation where a sole trader, a chauffeur is about to dispose of his expensive car which is held in a single asset pool. The prcoeeds will be far less than the tax written down value. As the business is not ceasing he cannot claim a balancing allowance. 

In his tax return he has never prepared a balance sheet or incldued deprecaition is his PL. As the car is being sold at a loss, can he claim a loss on disposal in his PL accounts?

 

 

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By MJShone
17th Jan 2020 12:26

I might be being thick but why does the business have to be ceasing in order for him to claim a balancing allowance? It's the disposal of the asset, not the cessation of the business that results in the balancing allowance.

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Replying to MJShone:
Psycho
By Wilson Philips
17th Jan 2020 19:11

Wrong. Generally, a balancing allowance in respect of pooled assets cannot arise until the business ceases, even where all assets are disposed of.

An exception is where the asset is in its own pool because of non-business use. The question is therefore why is the vehicle in a separate pool in this case?

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By chicken farmer
17th Jan 2020 12:50

How can he continue his business as a chauffeur (i.e. private car hire?) if he doesn't buy a replacement (or is he leasing one?)

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Replying to chicken farmer:
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By MJShone
17th Jan 2020 13:12

That thought had crossed my mind too, but I assume he's either hiring a car or buying a new one which will go into its own "pool".

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By Accountant A
17th Jan 2020 16:11

The moral being, chauffeurs shouldn't do their own tax.

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By Red Leader
17th Jan 2020 17:39

You mean there wasn't 5% private use?

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By Matrix
17th Jan 2020 17:39

If the accounts are only being prepared to compute his tax then why does he need a balance sheet or to book depreciation or loss on disposal? Given that neither would be allowable for tax , they don’t resolve the issue you think that you have.

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By Wanderer
17th Jan 2020 17:44

Quote:

As the car is being sold at a loss, can he claim a loss on disposal in his PL accounts?

No, not for tax purposes he can't. Best to stop masquerading as an (anonymous) accountant and engage (a real) one.
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