Thanks for the replies. Definitely worth a letter then.
Thanks for getting back to me.
It looks as if I was misinformed over the facts. The "Pub" had been a residential property for some time before they bought it. There was no VAT on purchase. The costs have been on improving the property.
So the question is unchanged - can they reclaim the input VAT on the improvements they've made if they let the property as a holiday let. Are they affected by the Capital Goods Scheme.
Thank you for all the comments. Brave/ foolhardy or not, this is what the third party agreed to (the transaction has taken place so I'm not being asked for advice here - I merely have the mess to sort out).
So in respect of the plant and machinery, I'm thinking of crediting the fixed asset disposal account with the net book value of the assets, so that there is no gain or loss in the accounts. Then debit the partners capital accounts with this figure - effectively the gift by each of the partners. Then an election under 266 CAA 2001 to transfer the asset at tax WDV (because of the availability of AIA in recent years this will be NIL).
In respect of the goodwill, assuming both parties agree I assume they make an election under Section 165 TCGA 1992 to hold the gain over?
Sorry, it's the term they use. Basically it's spa treatments - " treatments for arthritis, rheumatism, sciatica, aching joints, back pain, fatigue, insomnia, circulation, stress, muscular pain, stiffness, cramps or tension and we can also provide for the athelete anything from basic, pre and post sports massage right though to rehabilition from injury. Also ..... a specialist beautician for the hydration and beautification of the skin using latest technology and innovative technology". The property is rented and I understand that the son and taken over the lease. So the assets are the assets that relate to this part of the business.
I guess it could be argued that there is also a goodwill element. The assets transferred relate to a hydro centre, the business retained relates to homecare. The relative profitability of the two elements in the past is impossible to ascertain from the records the client provides.
Yes the assets are ones on which capital allowances have been claimed.
Actually my query was about mainly the tax (although perhaps not clearly expressed). I'm now thinking that the business could make an election under 266 CAA 2001 to transfer the assets at tax WDV. (Sharky and Werner applies to trading stock I believe). Any thoughts?
Not entirely sure - he's not a client. However, this is my understanding at the moment. It's now been suggested that the transfer should be at market value under Sharkey v Werner.
Ok have now spoken to the client. The club is a CASC and the shirt has been in the possession of the club for many years. It has a guide price of £20K-£40K at auction.
It has never been clear whether the shirt was originally gifted to the club (at a time when it would have had very little value) or whether it was just held by the club, having been lent to it by the owners.
It has become apparent that the shirt has value because of a similar one sold at auction recently.
The descendants of the original owner of the shirt have agreed with the club to split the proceeds 50:50. My thoughts now are that is how the sale should be structured. However, if the individuals sold the shirt and then made a donation of half the proceeds the club could possibly claim gift aid?
I assume that the 50% proceeds of sale (assume sold 50:50) wouldn't be taxable on the club. If it was a capital gain - no capital gains tax for CASCs.. And if it were determined that this was a trading transaction (although I cannot see why it should be) then the proceeds are likely to be less than £50,000 anyway.
Thanks Peter. I didn't. As I said in the question this is a client that came to me after their first accounts had already been done. I'm trying to sort out someone else's mistake and the purpose of the question was to see whether there was a way around this.