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Rural Development New Entrant Start-Up Grant

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Client recently started a second business of small farm ( Croft ). He received a Scottish Rural Development New Entrant Start-Up Grant of £10500.00 towards the cost of machinery. Should I show this grant in the P&L a/c as income and then claim AIA on the cost of the machinery or should I off-set the cost of the machinery by £10500.00 and claim AIA on the balance? 

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Lone Wolf
By Lone_Wolf
05th Nov 2019 17:07

I had one of these recently, and I'm sure the grant doesn't actually specify whether it's for capital or revenue expenditure. On that basis, it should be treated as revenue income: https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim40451

I'd include it as income and then claim AIA in your circumstances

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By korkidoerkizoom
05th Nov 2019 17:36

Thanks for your reply.
The grant in this case was specifically for the purchase of machinery

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Lone Wolf
By Lone_Wolf
06th Nov 2019 09:32

Well in that case just take it off the cost of the machine.

I just double checked and it was actually the Young Farmers Start Up Grant our client had, so slightly different.

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