I have a new sole trader client. A few years ago he bought a fixed asset to use in the business (with a bit of private use as well) but didn't claim any capital allowances for it as he was doing his own tax return and didn't know he could claim anything. If I take over the accounts now what should I do with it?
Probably the easiest approach is to assume that he has waived any capital allowance claims, thus the original value is still available to claim against. Unfortunately AIA/FYA will be lost, so the claim for 2012 would be 20% (adjusted for private use).
Alternatively, you could look at amending previous years tax returns (subject to time limits).
It depends upon the value of the asset and his tax affairs as to which approach would be best.
Thanks for your quick reply. So you think I could take 20% of the full value and not reduce the value by 20% per year since he's had it and then just start claiming the allowances this year, if you know what I mean? The value is about £30k I think so it's quite a bit!
As nick says you cant claim FYA as you can only claim that in the year you buy it.
If the asset was bought for say £30k and has no allowances claimed to date and it qualifies for capital allowances then you would be able to claim £6k (20% x £30k) this year and claim the balance of £24k going forward.
Given the amount involved in may be worth going back and amending previous years tax returns.
