When calculating the WDA on main pool plant & machinery, how should you treat the disposal of an item at nil value? In this case the item was simply binned as it no longer worked and had no scrap value.
I've read the HMRC guidance and am still unsure of how to do it.
Is is correct to,
A) Deduct the purchase price of the scrapped asset from the value of the pool, or
B) Retain the purchase value and deduct the sales proceeds, in this case nil.
In the accounts you would dispose of the item, taking the NBV to "loss on sale of asset" on the profit and loss. You would then adjust for this, in calculating your taxable profit - by adding back.
Then, for capital allowances on the main pool, I would just do nothing, except continue to apply appropriate WDA each year.
Technically, this is doing C.... But if you wrote it down for completeness, you would leave the purchase value as it stands in the WDV b/fwd (which would actually be the difference between cost and WDA already applied lumped in with everything else - possibly NIL if AIA was claimed), and shows sales proceeds of NIL. I don't really bother going that far. (was this a trick question!? LOL)
If the main pool falls below £1000, you can write the balance off in the year.
