Capital allowances and incorporation - Brain frazzled

Hi Everyone,

I have a construction partnership who are incorporating this year. Actualy, when they came to me they had already opened the limited company alongside the partnership and are going to phase themselves over.

They are looking to buy a Van. They are flirting with the idea of buying it within the partnership, claiming 100% AIA and then closing the partnership down and leaking all assets except the van into the company with the relevant goodwill calculation thus retaining personal ownership of the van and not including it in any CG34 form I might file with HMRC.

It's been a long old day - surely I am correct in saying that yes they can claim the capital allowances however the end of the existing trade is classified as a disposal event? http://www.hmrc.gov.uk/manuals/camanual/CA23250.htm

Accordingly they will simply incur a balancing adjustment equal to the capital allowance claimed? Right? Argh, I can't think!