can you claim....

JodieR

client purchased a second hand van outright and a few months later had a knock at the door from an HP company saying that there was an outstanding loan on the van. He paid it so that they didn't reclaim the van but never managed to recover the amount from the seller. I'm guessing the payment meets the 'W,E & N' test but I'm just not 100% confident he can claim for this in his accounts.
Oh how I 30 Jan clients

T.C.

Instinct would say no because he should have checked before purchasing. Not sure though.

PGM

T.C. wrote: »

Instinct would say no because he should have checked before purchasing. Not sure though.

Not sure either, I'd favour saying yes. If there was a refund on the van I'm sure the HMRC would want that deducted, so they can't have it both ways, and the HMRC shouldn't punish them for getting a bad deal, just lump it all in with the purchase price?

clegganator

I would of said it's another expense incurred to gain control of the asset so it should be capitalised.

jamesm96

PGM wrote: »

Not sure either, I'd favour saying yes. If there was a refund on the van I'm sure the HMRC would want that deducted, so they can't have it both ways, and the HMRC shouldn't punish them for getting a bad deal, just lump it all in with the purchase price?

Yeah I'd lean toward the 'yes' camp too. Sure he should have checked the detail on his purchase more carefully but that's a commercial issue, not a tax one. If he'd taken a van on contract hire without noticing there was a 5,000 mile restriction when he does 30,000 miles per year, he'd suffer hefty excess mileage charges and they'd be allowable. And who's to say he wouldn't have bought the van if he had known about the finance? Okay it's unlikely, but if he had, the whole amount would have been put down as cost.

Out of interest, I've always though the W, E & N was for employment expenses, and that business expenses just needed to meet W & E... have I got that wrong?

Monsoon

jamesm96 wrote: »

Yeah I'd lean toward the 'yes' camp too. Sure he should have checked the detail on his purchase more carefully but that's a commercial issue, not a tax one. If he'd taken a van on contract hire without noticing there was a 5,000 mile restriction when he does 30,000 miles per year, he'd suffer hefty excess mileage charges and they'd be allowable. And who's to say he wouldn't have bought the van if he had known about the finance? Okay it's unlikely, but if he had, the whole amount would have been put down as cost.

Out of interest, I've always though the W, E & N was for employment expenses, and that business expenses just needed to meet W & E... have I got that wrong?

I agree with this - I'd allow it.

And yes, it's W&E for business and WEN for employment expenses.

hunterhouse

Mike,

No - W & E is indeed correct...but it has been a while since I've had to stop and think about it!

H

JodieR

Thanks guys and apologies for the excess 'N'!

Monsoon

JodieR wrote: »

Thanks guys and apologies for the excess 'N'!

We let you off, it's the 31st Jan after all