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Tax Relief on Police Seized Vehicle

Client purchased a vehicle as trading stock - now seized by police!

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Dear All,

Slightly strange one here!

My client has purchased a vehicle (as trading stock but, equally relevant for asset purchase). Basic HPI checks were carried out, a V5C logbook was provided and my client acted in good faith. However, the police have seized the vehicle stating that it had been reported stolen (which has proved to be true)!

Clearly, there is a huge back-story (including compliance with police investigations etc.) which I do not intend to go into here but the top and bottom of it is: my client paid a decent amount of money for the vehicle, he no longer has the vehicle and he has no right to recourse/ recompense.

On the face of it, the handling of stolen goods, in full knowledge, is a criminal offence and hence it would follow that the expense is not claimable against tax. However, my client has been wholly absolved of any culpability in this regard and has not committed a criminal offence.

Furthermore, the loss of a stock asset (or fixed asset), due to theft would generally be allowable (WDV, less the proceeds from the insurance company - if any). However, the vehicle has not been stolen from my client, it has been seized and returned to the rightful owner. Incidentally, no insurance claim was available here as losses resulting from the seizure was not covered on the policy (fairly standard terms).

Has anyone had any prior dealings like this? Is anyone able to advise on whether tax relief is available? Any other comments?

I look forward to your comments!

Kind regards

Dave

Replies (9)

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paddle steamer
By DJKL
16th Dec 2019 14:30

Opening stock+purchases-closing stock=COS, frankly I would just follow this as you say it was bought as stock and it cannot be put in closing stock and even if it could its NRV is zero. If a sole trader might put white box note, if limited would consider quantum and what disclosure necessary.

Does your client not have some business insurance to cover this sort of thing?

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Replying to DJKL:
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By DKB-Sheffield
16th Dec 2019 15:04

Thank you for your response and wise words!

Yes, my client has business insurance but, it does not cover (what the insurance company say) is "handling of stolen goods" even if this is an innocent mistake. They took the view that the vehicle was never "owned" by my client and hence could not be insured.

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paddle steamer
By DJKL
16th Dec 2019 14:35

Should have added- if say it had been torched and not insured how would you have treated that?

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Replying to DJKL:
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By DKB-Sheffield
16th Dec 2019 15:06

Thank you.

As you suggest, a torched vehicle would simply be a stock write-off. It's just the police seizure part which was hampering my brain!

Thanks again

Dave

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By The Dullard
16th Dec 2019 14:41

This is what ITTOIA 2005, s 34(1)(b) and CTA 2009, s 54(1)(b) - albeit that they are framed in the negative - are there for. It's deductible under GAAP, it's not capital expenditure and the sections referred to do not disallow it.

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Replying to The Dullard:
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By DKB-Sheffield
16th Dec 2019 15:05

Perfect. I've checked the legislation and it seems a good fit.

Thank you so much!

Dave

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By Joe Alderson
16th Dec 2019 16:17

Would your client not have the right to pursue the loss in court from the people he bought the vehicle off?

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Replying to Joe Alderson:
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By The Dullard
16th Dec 2019 16:25

Er... you mean those criminal people?

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By WhichTyler
16th Dec 2019 16:23

Do they have a case against the vendor? My hazy memory of Law for Dummies training says not depending on whether the vendor know it was stolen, but perhaps the insurance company can advise (as when you are hit by an uninsured driver)

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