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Balancing charges on owner's car write off after accident

AntoinnetteAntoinnette Well-KnownRegistered Posts: 118
Hi there,
One of my clients has just informed me that she had an accident in the snow in January and the car wasdeclared by the insurers to be a write off. They however paid her £2250 in compensation.
Do I use this compensation figure as a gain on disposal and calculate balancing charges on the capital allowance car pool? It wasn't a gain per say as the car was written off and not sold.....but she received money from them:confused1:

Cheers
A

Comments

  • coojeecoojee Experienced Mentor Registered Posts: 794
    Hi there,
    One of my clients has just informed me that she had an accident in the snow in January and the car wasdeclared by the insurers to be a write off. They however paid her £2250 in compensation.
    Do I use this compensation figure as a gain on disposal and calculate balancing charges on the capital allowance car pool? It wasn't a gain per say as the car was written off and not sold.....but she received money from them:confused1:

    Cheers
    A

    It's just disposal proceeds in the same way as if the car had been sold for that amount of money. If it creates a gain then it creates a gain and you treat it in the normal way. Having re read your post I see that you've used the term "compensation", do you mean they paid her that over and above the market value of the car? Why would they do that? What are they compensating her for, it wasn't their fault that she crashed the car. All they should have paid her is the market value.
  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    Agreed. Just treat it like a sale.
  • AntoinnetteAntoinnette Well-Known Registered Posts: 118
    coojee wrote: »
    Having re read your post I see that you've used the term "compensation", do you mean they paid her that over and above the market value of the car? Why would they do that? What are they compensating her for, it wasn't their fault that she crashed the car. All they should have paid her is the market value.

    Thanks coojee that's is the wording of her email but I agree it has to be the market value.....they are not dumb insurance companies :-)
  • AntoinnetteAntoinnette Well-Known Registered Posts: 118
    Thanks T.C, I thought it might be but wasn't entirely sure.

    cheers
    A
  • coojeecoojee Experienced Mentor Registered Posts: 794
    Thanks coojee that's is the wording of her email but I agree it has to be the market value.....they are not dumb insurance companies :-)

    Well they are a bit dumb sometimes but never to the point of giving away money that they don't have to :-)
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