I have a client who already runs one business and who started a second business, being a cafe, he started trading on the 10th April but most start up cost including all new equipment was in the previous tax year. Am I right in thinking they are deemed to have been purchased on the first day of trading and so I would claim AIA in the first trading year? Or do I need to claim it in the previous year and carry forward a loss? In which case what date would be his starting date?
Thanks for any guidance Jean
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Capital Allowances Claims
Jean,
My understanding is that you cannot claim capital allowances unless you are trading so the expenditure would be treated as if it occurred on the first day of business. However if your client now purchase a second cafe i.e. started a chain they could claim the capital allowances because the expenditure would be incurred as part of an existing trade.
Hope that makes sense.
Depends
If the equipment was purchased prior to commencement of the trade but was specifically purchased for the new business, then yes AIA can be claimed.
If the equipment was already owned by your client and he then decided to transfer it into his new business, then AIA can't be claimed.