van on company cessation

can it be disposed off at nil proceeds

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Company ceased trading 31/1/17

Company bought a van in the ye 31/1/17 for £3k. Depreciated at 25%

WDV of the van at 31/1/17 was £2250. Does it get disposed of at roughly NRV so there is a balancing charge £750 in the tax comp but then presumably in the accounts the Debit for disposal proceeds of £2250 has to go to the Directors loan account too?

Or can it be disposed of at nil proceeds?

 

Replies (12)

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By Ruddles
26th Feb 2017 14:18

It depends on who the company is transferring the van to and for what consideration.

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By tom123
26th Feb 2017 14:23

I'm guessing the OP rather fancied a free van :)

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By practiceperson
26th Feb 2017 14:30

doesnt it have to be disposed off at market value in the cessation accounts? So a Dr to DLA of eg £2250 and Cr P/L dispoal £2250?

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By Ruddles
26th Feb 2017 14:36

See my response above

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By practiceperson
26th Feb 2017 14:40

i think the op is asking exactly that? ie its going to the director, because they mention DLA, and they are asking at what value this transfer can be made at.

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By Ruddles
26th Feb 2017 14:45

IF that is what the OP is asking then the answer is that the company can sell the asset to the director for £0, £1, £10m or any other figure, that figure appearing in the accounts.

The tax position may be a little different, but that wasn't the question.

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By DJKL
26th Feb 2017 14:39

I think you need to consider the tax computation in light of purchasing and disposing of the asset within the same period.

Market value is appropriate (Edit-usually). Also if vat registered consider whether needs accounted for in final return.

The depreciation of course has no impact on the tax computation and of course different companies have different approaches re whether or not depreciation is even charged in the accounts in the year of disposal (I tend as a rule not to charge in year of disposal, but usually the charge by then is negligible)

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By practiceperson
26th Feb 2017 15:01

If van cost £3k its not unfair to say its worth nil at cessation date.So show the P/L on disposal in accounts at £2750 . Tax comp can then show addition £3k and disposal procceds nil with balancing allowance £3k.

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By DJKL
26th Feb 2017 15:12

Quote:

If van cost £3k its not unfair to say its worth nil at cessation date.So show the P/L on disposal in accounts at £2750 . Tax comp can then show addition £3k and disposal procceds nil with balancing allowance £3k.

Well only if it is written off in a major accident and even then you will get a price for it.

We changed our van last year, old one had more dents than flat panels, has an MOT fail list as long as your arm, needed welding in places there was no metal left-we sold it on Gumtree.

If it was bought for £3,000 within a year it is still worth something.Break it for parts it is worth something. it is not worth nil.

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By DJKL
26th Feb 2017 15:13

Duplicate-second one today-what is wrong with this site!!

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By Cloudcounter
27th Feb 2017 08:12

How long have you got?

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By practiceperson
26th Feb 2017 15:21

yes good point..i was thinking of an old car i had a while back but i put 50k miles on in less than a year and it was worth nothing, so i literally gave it away!

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