You will of course end up no better off than the position that you are in now as one accountant argues it as Revenue expenditure and the ex tax inspector states that it's capital expenditure.
You might enjoy the HMRC bashing (by the ex inspector) in the final post of the thread.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I was inclined to go for advertising. That's partly why I mentioned about it being several months after the van was bought (as one of the posts on accountingweb says).
Now the next problem....advertising is currently a direct expense in Sage but I'd hardly say advertising on a van is a direct expense. It's for a plumbing business - I suppose on occasion it has been direct, they have been spotted at one job and asked to go to another house.
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Never buy black socks from a normal shop. They shaft you every time.
This my help when i was doing my Level III in Self assessment in one of the Assignments there was a value for advertising this included the cost of a new sign to put over the shop .
the assessment was to do the adjusted profit and loss account and the value of the new sign was in fact a disallowable expenses as i had to add it back so we can only conclued that the sign was a capital expense .
I would therefore be inclined to treat the sign for the van in the same way depending on its cost as a capital expenses
it will be Interesting to know what the other guys think
Marty
-- Edited by nautica on Friday 10th of February 2012 01:01:16 PM
-- Edited by nautica on Friday 10th of February 2012 01:03:33 PM
I can see both points, however this is something you would be putting on after buying the van, and taking off before selling the van, in my mind both of these would be an advertising expense. Like if you bought a premises as a shop, would you capitalise putting a sign up?
It seems like a permanent hoarding to me and would almost certainly last over 2 years unless the vehicle was sold. We don't know are the £'s paid to check the materiality. Paradoxically, it could conceivably cost more than the original asset to 'renew' the signwriting if the original faded.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I would be inclined to expense it as advertising - if someone bought the van, the only reason they'd want to keep your business name on it would be if they were also buying the business.
I would say a shop sign is a fixture & fitting, and therefore a capital expense.
Likewise I would say sign writing a van is a capital expense, as it will last as long as the van, or as long as the van is owned by the business. I would also consider adding the expected cost of removing sign writing to the actual cost value, as it it will be necessary to remove it when sold.
Having read more of your opinions on this thread I am some what inclined to have a rethink on the matter and looking at it from a new angel if the sign writing was to be painted on to the van then you could say that this was just advertising and therefore revenue expenditure.
But then on the other hand if the sign was of the magnetic kind that you put on when trading and take off when using the van for your one use then there could be an argument for capital expenditure.
Marty
-- Edited by nautica on Friday 10th of February 2012 10:44:09 PM
While my opinion in the broad view is as I have stated, at the end of the day I would probably expense it based on materiality. just got be consistent in how it is treated.
How would others interpret this extract from BIM42550
"Ordinary current expenditure on advertising the trader's goods or services (for example, on newspaper advertisements, distribution of free samples of the goods dealt in) is allowable.
Where the expenditure is on the erection of permanent hoardings or other apparatus of a durable nature, it is disallowable as capital expenditure."
Which I think is what Tim alluded to in his earlier post
Would a van be an "apparatus of a durable nature"?
I was referring to Shauns accountingweb link but maybe we could contrive something to avoid needing a signwriter in the first place. Over to you, Peasie.
Again, just my opinion but as there is a permanance about both types of signage, I would have been inclined to capitalise both types. However on a materiality basis, the magnetic signs can be relatively cheap, so would probably expense them.
Just as example, for clarity on why I think this way. If Eddy Stobart places an ad in a national newspaper, it may cost him £5000, after a day it's landfill (sorry, recycled).
The livery on his trucks (which are massive transfers), probably cost tens of £1000 for the fleet, and have a useful life of x years depending on how long they keep the trucks, therefore the "advertising" is spread over several years. When the truck is sold, the signwriting has reached the end of its useful life, and will cost him money to "dispose" of it. He will not want the livery to stay on the trucks when he sells them, so the cost to remove the transfers should be factored into the capital cost.
Any repairs to the sign writing, say if it got scraped on a wall, would be like any other repair to an asset, an expense.
Edit: Just an afterthought but it could also be construde, that if the cost of an asset, is the total cost of bringing it in to service, this could include the sign writing.
Bill
-- Edited by Wella on Saturday 11th of February 2012 10:02:14 AM
Id look at the cost and then decide, if its a small amount i would put it through as capital, however the arguement for capital expenditure is also a valuable arguement. your call
At the end of the day, despite my overall thoughts on the subject, it would be down to the actaul cost, in the grand scheme of things as to how I would treat the sign writing.
