Just doing the year end for a Company and a vehicle was introduced to the Company at a cost of £1000 at the start of trading, and duly recorded in fixed assets. The vehicle was scrapped some time later (same accounting period) and written off so I have written it off on the accounts as a P&L item, nett loss on fixed asset. Taxfiler has disallowed this as on the Adjustments to trade profits but as there as I was aware it's allowable?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John
Initial thoughts, bit ropey introducing and write off in same period.....asking for trouble?
That aside, are you producing accounts in Taxfiler or have these been done in VT accounts thingy? Just being nosey!! Although, in part I'm not....is this an 'adjustment' type entry in Taxfiler?
More (daft questions)....have you removed the fixed asset? Did you depreciation at all? How much did you get for it/are you writing off.
Might be worth screenshots?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi John Initial thoughts, bit ropey introducing and write off in same period.....asking for trouble?
Unavoidable in this case, employee left keys in and it was taken for a joy ride and written off.
That aside, are you producing accounts in Taxfiler or have these been done in VT accounts thingy? Just being nosey!! Although, in part I'm not....is this an 'adjustment' type entry in Taxfiler?
I started doing it in Taxfiler this morning, got peed off and decided to (at long last) download VT accounts. Similar entry in there though which has got me thinking I must be wrong?
More (daft questions)....have you removed the fixed asset? Did you depreciation at all? How much did you get for it/are you writing off.
It was only 3 months after introduction, was it worth depreciating do you think? It was towed away by police and the cost of retrieving outweighed the scrap value.
I removed the fixed asset by journaling CR FA Vehicles: Disposal DR Expenses: PL on disposal of plant and machinery. It is this entry that is being disallowed for tax.
Might be worth screenshots?
Attached from taxfiler. The software made the entry.
Please excuse me if this is totally wrong but as I said in another post I have been sitting in the garden most of the afternoon and the sun may have gone to my head.
I have never used Taxfiler so not sure how it deals with fixed assets.
My understanding is that any loss on a disposal of a fixed asset is added back to the Trade Profit and any profit of a disposal is taken away to arrive at the tax adjusted profit before Capital Allowances and other Income are taken into consideration which will then leave your Total Taxable Profits.
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
I think the heat is frazzling my already frazzled brain!
Agree with Doug, but have no idea which screen you on in on Taxfiler anyhoo. Is that the Accounts screen? Or the CT screen. I did try an Accounts one a while ago and resorted to just uploading the file from VT as the thing was doing my head in. I was going to have a twiddle with it, but it means me setting up a new one and Ive not got the energy for that. When you say similar entry in VT - how do you mean? Sorry John!!!!!!
Assuming the insurance didnt pay out and laughed this one off the plot! Did the member of staff get the sack?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
My understanding is that any loss on a disposal of a fixed asset is added back to the Trade Profit and any profit of a disposal is taken away to arrive at the tax adjusted profit before Capital Allowances and other Income are taken into consideration which will then leave your Total Taxable Profits.
Hi Doug
That's my understanding as well but as this has happened in both taxfiler and VT accounts I am happy that the software is correct, so I am obviously missing something out. At present I have 29k profit but the loss on disposal takes it to 30k, which is going to cost the company £200
Joanne, the screen I was on is CT600 trading profits and then the adjustment to trading profits, the next tab is capital allowances. On VT accounts I have a tab called taxcompdata and VT have put the £1000 there under depreciation/loss on disposal.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
That's my understanding as well but as this has happened in both taxfiler and VT accounts I am happy that the software is correct, so I am obviously missing something out. At present I have 29k profit but the loss on disposal takes it to 30k, which is going to cost the company £200
Joanne, the screen I was on is CT600 trading profits and then the adjustment to trading profits, the next tab is capital allowances. On VT accounts I have a tab called taxcompdata and VT have put the £1000 there under depreciation/loss on disposal.
Hi John
As I said got no experience of using Taxfiler, but now that the loss has been added back to the Trade Profit should you not account for it within the Capital Allowances which will then lower your TTP back to 29K
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
One way of thinking about profits and losses on disposal of assets is to regard them as a final adjustment to the estimated depreciation charges, made over the lifetime of the asset, bringing the accumulated total into line with the actual depreciation in value suffered as measured in the final disposal transaction. As with all depreciation, the profits and losses are added back to profit in the tax calculations and accounted for via the Capital Allowances regime as other contributors have noted.
This is where I'm stuck, what capital allowances can be claimed? The vehicle was scrapped before the end of the first accounting period. Had the vehicle been scrapped after that period AIA could have been claimed.
Ian, I understand what you're saying regards depreciation, but just suppose it worked the other way, and an asset appreciated in value. So £500 gets added to the PL as a CR lets say that makes the nett profit £30k, and then the adjusted profit on the Corp computation reduces that back to 29.5k, meaning the Company doesn't pay tax on the profit on that asset.
I'm probably looking it at it all wrong btw.
Edit: Comment added to Ian.
-- Edited by Leger on Wednesday 21st of June 2017 10:36:18 AM
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi Doug, the vehicle was introduced at the start of the business, it was scrapped 3 months later for the reasons given. Can I still claim WDA? I was under the impression the asset still has to be in possession at the end of the accounting period. (I wasn't thinking yesterday, but AIA not available due to the vehicle belonging to the Director prior to the business starting)
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi Doug, the vehicle was introduced at the start of the business, it was scrapped 3 months later for the reasons given. Can I still claim WDA? I was under the impression the asset still has to be in possession at the end of the accounting period. (I wasn't thinking yesterday, but AIA not available due to the vehicle belonging to the Director prior to the business starting)
Hi John
Hope you went back and put your shorts back on because it turned out roasting again here, was Ripon the same?
Didn't realise the vehicle came from the Director, was the vehicle part of a previous business owned by the Director and if so had AIA or Capital Allowances been claimed before this vehicle was introduced?
-- Edited by Artois on Wednesday 21st of June 2017 07:54:56 PM
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Not used in another business and no allowances previously claimed. The vehicle was replaced but I'm claiming AIA on that so this was the only other asset.
I wish I had changed again Doug. It wasn't too bad until about 4 pm then it just got hotter and hotter.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Not used in another business and no allowances previously claimed. The vehicle was replaced but I'm claiming AIA on that so this was the only other asset.
I wish I had changed again Doug. It wasn't too bad until about 4 pm then it just got hotter and hotter.
Hi John
My understanding is that as you say no AIA is allowed as the vehicle was introduced from a connected person but you should still be able to claim WDA on the amount as on introduction it will enter the general pool, was it sold to the company at Market Value?
Keep meaning to look through the legislation about when you say about "still being in possession at the end of the accounting period" but just not had the time as yet (my fault for the afternoon in the garden) but will try and have a look later.
The only other thing I will say is I agree with Joanne in that it might seem a "bit ropey" as in Director sells to company for £1000, after 3 months keys were left in it, it was then stolen and written off, the Company then claims back the £1000 in Capital Allowances, (Sorry for being cynical)
Also as Joanne asked do you know what happened to the member of staff? Just out of curiosity
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
So capital allowance can be claimed against an asset bought and sold in the same accounting period? Having not done one like this before I assumed not.
It was introduced at market value yes, insurance couldn't be claimed because keys were left in. I appreciate your cynicism but the Company doesn't benefit. WDA claimed but lost again on the loss on disposal. My initial query was regarding the Company losing out by £200 because of the loss on disposal, but if WDA allowed as well, then it corrects the issue.
The employee was dismissed I believe. (sorry Joanne for ignoring you, it wasn't intentional)
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
