I'm just about to file my first year end accounts to Companies House.
As we're small limited company and will be filing abbreviated accounts only.
I've bought quite a lot of computer equipment when I was still a sole trader. I've transferred it all to limited company at the beginning of financial year by creating a journal (dr - computer equipment acc., cr - directors loan acc.)
I've printed Balance sheet from FreeAgent and the total of Capital Assets include amount form above journal + additions within a year. However when I go to 'Tangible fixed assets note' while filing with Companies House 'Cost' includes 'Additions' only and no balance brought forward. Shall I include amount of above journal transactions in 'Additions'?
Well...I did journal this journal with date of the first trading day...
I meant to indicate that the company has no opening balance on any assets at incorporation. Any assets it owns at the end of the year are, by definition, in-year additions. Include and depreciate as for the other additions.
One more question:)
I do understand that I will not be able to use this balance brought forward (assets transferred from my sole trading times) as Capital Allowances in corporation tax return (just additions added during the year) as this was used as capital allowance in my personal tax return for sole trading last year.
Am I right thinking that?
Tax isn't my area at all but I'd have thought that the self assessment would account for any balancing allowances / charges and the company would get capital allowances based on the transfer value. Perhaps others could correct if this is wrong/simplistic?
If the equipment was valued at time of incorporation at less than £6000 then capital gains will be exempted under the chattels exemption otherwise capital gains tax will be payable on the sale to the new entity.
For the transfer of assets as has been stated by Ian the assets are introduced to the business as though purchased on day one of trading of the new limited company (which you must always remember is a totally seperate entity to what existed before, it is not simply a different suffix!).
What Ian did not emphasise in his response was that the transfer value of assets will be their written down value as they existed in the old business. So, if an asset cost £1000, was written down to £500 in the books. On transfer it's value is £500, not £1000 therefore relief obtained via the self employment will not be double counted on incorporation.
Various reliefs are available (Rollover, Incorporation, Entrepeneurs, etc.) and you should talk to your accountant about what can be done for your specific circumstances to minimise your tax liability on incorporation. Your accountant will also be able to give proper advice in relation to any brought forwards double taxation and Capital losses.
Also, you mention that you only file abreviated accounts but don't forget that you still need to prepare full accounts and tax calculations to file with HMRC with your CT600.
Non of the above should be considered specific advice. It is merely intended to show that you need your companies accountant looking into your incorporation strategy which is individual to your business rather than a one size fits all type of answer.
kind regards,
Shaun.
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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.
