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08th Jul 2019 09:30

Kol-R, see BIM70020 re deemed proceeds "a person must bring into account a cash basis receipt equal to the market value of the asset when the person ceases to use it for the purposes of the trade".

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By Kol-R
to gainsborough
08th Jul 2019 09:45

Yes but that’s while he is trading and stopped using the equipment in his trade which is different than when he ceases trading completely.

gainsborough wrote:

Kol-R, see BIM70020 re deemed proceeds "a person must bring into account a cash basis receipt equal to the market value of the asset when the person ceases to use it for the purposes of the trade".

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to Kol-R
08th Jul 2019 09:55

You are making a distinction there that isn't made in the manual referred to. What is it that makes you think the treatment is different if trade ceases entirely?

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By Kol-R
to Duggimon
08th Jul 2019 10:00

There is a part dedicated for cessation of trade on the next page which only mentions trading stock. If that is the case what happens to asset purchased and paid for in instalment every year and every year an expense is claimed for what has been paid. What if there are instalment left to pay on the asset after the cessation and were not claimed, do you still bring a cash basis receipt based on the whole market value of the assset?
Imagine you paid 1000£/year for an asset in instalment in year 2 you ceased trading, all you paid is 1000£ from the first year and from year 2 you started paying it from your own money and obviously you didnt claim any expense what would your cash receipt be in that case ?

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to Kol-R
08th Jul 2019 10:36

It's not a page dedicated to cessation of trade, it's a page dedicated to the valuation of trading stock on cessation. You shouldn't read it as the one stop shop for all cessation of trade eventualities.

There is no other reasonable conclusion to draw other than cessation of trade means the trade assets are disposed of, either by selling to a third party or, by default, the trader takes personal ownership. The disposal is dealt with per BIM70020.

In your example, the value of the asset disposed of is, per the BIM, reduced to the figure, or a proportion of the figure, claimed under the cash basis. So it's limited to £1000.

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to Kol-R
08th Jul 2019 09:56

Kol-R wrote:

Yes but that’s while he is trading and stopped using the equipment in his trade which is different than when he ceases trading completely.

Who says?

If you don't know the answer, how do you know it's not what gainsborough suggests??

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