Aia

jilt

Year 1 limited company accounts, AIA claimed for a laptop.

Trade is wedding services, jobs can be a few weeks/months in between so doesn't have income all through the year.

3 months into 2nd year and 5 months since had a job, client decided to give it up and strike off the company.

As no trading in 2nd year, is year 1 classed as year of cessation and if so do I need to file an amended CT600 without the AIA?

deanshepherd

I would say trade ceased when client made the decision to 'give it up'.

AIA can still be claimed but presumably there will be a balancing charge in the final period.

jilt

Thanks Dean. At the risk of sounding stupid I've no WDV bfwd so there can't be a balancing charge can there? Have not come across this before.

I also have a sole trader who bought a small van last year, claimed 100% AIA, but has now contacted me to say he's got himself a job and is giving up his self employment. Again no WDV bfwd so no allowances/charges?

I'm okay with WDAs etc but the AIA has thrown me, or am just making up problems for myself?

Newbie

There is no WDA as AIA has been claimed, the balancing charge will be the value of the asset at the point it was transferred back to the individual. Actually had this scenario with a driving instructor

jilt

Hi Newbie, so are you saying that the net book value of the laptop in the accounts is to be paid as a balancing charge,
as obviously for capital allowance purposes the value is £0?

Monsoon

Bought new : Cost £500.

Business ceased, taken back into private use at market value £400.

AIA £500, Balancing charge £400, net capital allowances £100.

jilt

Hi Jenni,

Think I'm confusing people here. The AIA was already claimed in the year prior to cessation so no WDV bfwd. Am having the week from hell, I'm sure this isn't that difficult otherwise I think I'd better find an alternative trade ..lol

Gem7321

I've also had this with a couple of times recently - yes I believe you dispose of the assets at the NBV in the accounts creating a balancing charge.

Monsoon

Ahhh. Ok, AIA was claimed in a prior year.

In which case, in this year there is a disposal at current market value (not NBV) as a balancing charge.

jilt

Thanks both, I can't believe I couldn't find this in my ATT book or anywhere else. That's it am definitely going to sit those ATT exams and then do CTA as I don't feel even ATT covers tax in enough detail. I need this knowledge and have felt really uncomfortable this week about it all.

Thanks again.