Corporation Tax and Capital losses

SussexAccountancy

Hi,

I am closing down a small ltd company, and have some assets to transfer over to the Director, as she is moving back to sole trading. These items are a camera and computers/laptops.

As per the P&L I've done the usual write off of cost of assets (£6000) vs accumulated dep'n (£4000) and also transfer to Director for her sole trading (£1000) which gives an exceptional item on the P&L as £1000 loss on disposal.

Onto CT calculation:

For the items I've transferred over to her sole trading business, which were bought in 2012/13: (camera, ipad and laptop) no Capital Allowances were taken, as she was looking to close the company (and made a loss too, so no CT to pay last year).

Could you confirm for these items, to claim the capital losses, I am taking purchase price, minus Market Value paid by Director, and this is the amount I can claim losses on with the CT computation.

There is also a £300 NBV balance, which I have written off, which has been bought forward from previous years (at least 2011/12) - I am assuming I could also claim the losses on this, assuming that they haven't already been taken through AIA/pool allowances, and that the computation would be the same as before - purchase price less any capital allowances already taken?

If someone could confirm if I have the correct understanding, it would be much appreciated,


Thanks


J

KernowAccountant

Being a pedant, I feel that I should point out that if the assets in question have ever qualified for capital allowances, regardless of whether they were actually claimed, then the "losses" are NOT capital losses (TCGA 1992 s.45).

SussexAccountancy

Hi

Thanks for that - I've had a look at TCGA - I understand that wasting assets are not liable for capital gains, (and therefore losses) but thought that assets used for trade/profession is exempt of this exemption - which seems to show in TCGA 1992 s45 para 2 -

Para 1 talks about any wasting/moveable assets not being liable for capital gains -
Para 2: Subsection (1) above shall not apply to a disposal of an asset if, ........ the asset has been used and used solely for the purposes of a trade, profession or vocation and if that person has claimed or could have claimed any capital allowance in respect of any expenditure attributable to the asset or interest....

To me that reads capital gains(and therefor elosses) can be claimed on disposal if used solely for trade (which it is)

Or am I reading it wrong?

Thanks for any help offered!


J