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)
Please login or register to join the discussion.
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.
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)
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.