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Post Info TOPIC: Balancing Charge
Kitty37


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Balancing Charge
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Hi

I work for a client who has previously claimed AIA on assets which were for display purposes in a showroom. Due to a recent showroom upgrade the assets are now being sold to customers but in the majority of cases as part of the sale of an entire kitchen/bedroom. It is therefore difficult to determine the sale proceeds for the elements that were previously capitalised.

Obviously the WDV is zero for tax purposes as AIA was claimed in full for them and any proceeds would give rise to a balancing charge. Has anyone any suggestions for the best way to treat the asset sales?



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MarkS


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What is the nature of the business?

I am assuming it a kitchen/bedroom retailer?

In that case why was AIA claimed in the first place on the display items?  As there is an argument that should have been classified as stock instead.

Without an accurate split my inclination would be to show a tax neutral position and show sales proceeds equal to the AIA amount previously claimed.

Regards

MarkS



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
Kitty37


Senior Member

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Posts: 114
Date:
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Hiya - the business is a kitchen and bedroom retailer yes and the items were classified as fixed assets as it was assumed that they would be on display for a number of years.
Thankyou for your reply.....

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