Leeway with 'wholly and exclusively for business use' regarding furniture?

[northernladuk]

If it has time to depreciate, does it stop being an issue?

I don't think you'd put a garden office as a depreciating asset do you? It would still be owned by the company and likely to add to the value of the house. He'd have to do some jiggery pokery to transfer it to him personally before selling the house.

[northernladuk]

I don't think you'd put a garden office as a depreciating asset do you? It would still be owned by the company and likely to add to the value of the house. He'd have to do some jiggery pokery to transfer it to him personally before selling the house.

Here you go. No good news in there to make a garden office a slam dunk freebie.

https://www.ridgefieldconsulting.co....garden-office/

[Fred Bloggs]

You mean his business paid for his garden office? So long as his accountant is happy with it (they shouldn't be, but some might just let it go), its unlikely he'll ever be found out, unless he's audited by HMRC. But if you want to stir things up, ask him what his business is going to do with the garden office if he sells his house.

Apparently so. Mrs Bloggs overheard his wife bragging about it in the local coffee place to her mates. I doubt anything will happen, they have lived in the same house more than 30 years and I doubt they're moving anytime soon.

It's mildly irritating that there's VAT likely being reclaimed and corporation tax relief on the expenditure. Not a great example of compliance to the rules of the game.

[TheCyclingProgrammer]

Apparently so. Mrs Bloggs overheard his wife bragging about it in the local coffee place to her mates. I doubt anything will happen, they have lived in the same house more than 30 years and I doubt they're moving anytime soon.

It's mildly irritating that there's VAT likely being reclaimed and corporation tax relief on the expenditure. Not a great example of compliance to the rules of the game.

VAT reclaimed, probably. No corporation tax deductions for buildings though.

[d000hg]

I don't think you'd put a garden office as a depreciating asset do you?

No idea. Why wouldn't you? They are a depreciable asset though I don't know over what terms. A log cabin or shepherd's hut or something of that type, which are extremely popular now, are typically not expected to last as long as a typical house so why would you not want to recoup the expenditure? And my point was if it has reached zero(ish) value by the time you move, couldn't the company then write it off/give it to the house owner?

[northernladuk]

No idea. Why wouldn't you? They are a depreciable asset though I don't know over what terms. A log cabin or shepherd's hut or something of that type, which are extremely popular now, are typically not expected to last as long as a typical house so why would you not want to recoup the expenditure? And my point was if it has reached zero(ish) value by the time you move, couldn't the company then write it off/give it to the house owner?

You depreciate the asset over it's useable lifetime which is a long time with a decent building. I believe 2% is allowable at best and with some of the solid new builds it's likely to go up in price. And even if you stay long enough to depreciate it to zero you can't still give it away. It's still a asset of the company so have to sell it at a reasonable market value.

[ladymuck]

No idea. Why wouldn't you? They are a depreciable asset though I don't know over what terms. A log cabin or shepherd's hut or something of that type, which are extremely popular now, are typically not expected to last as long as a typical house so why would you not want to recoup the expenditure? And my point was if it has reached zero(ish) value by the time you move, couldn't the company then write it off/give it to the house owner?

Assets can appreciate as well as depreciate. Not everything reduces in value over the course of the time you own it. It's highly likely that a property asset would increase rather than decrease in value over the period it is owned.

You would need to revalue the property on an annual basis, just like you revalue your computer equipment by running depreciation journals.

With something like property an assessment would be done against the actual sale price of comparable properties in the area. IANAA but I would look at the whole property (office + dwelling) value and compare the change in value since date X when the office was built. Then attribute the change in value according to sqft so if the office is only 5% of the total sqft of the whole property then its value is adjusted by 5% of the total change in value (it makes sense in my head but I may have explained badly).

[looonytunes]

What are the guidelines for assessing if its depreciated or appreciated

Continuing with the example of a garden office, should you have it for over a decade or even two and it were to fall into a condition where is was no longer viable as an office. Can you make your own assessment of its value?

Or sell it back to yourself at a price the company was happy to accept?

[WTFH]

What are the guidelines for assessing if its depreciated or appreciated

Continuing with the example of a garden office, should you have it for over a decade or even two and it were to fall into a condition where is was no longer viable as an office. Can you make your own assessment of its value?

Or sell it back to yourself at a price the company was happy to accept?

Are you saying you'd waste your company money on it, then when it was unusable you'd have it valued at zero?

Your new accountant should help you on how to depreciate assets, but you need to record your assets on your books until such times as they are written off/sold. So you can't spend £100k today on a garden office and leave it on your books for 10 years at £100k, then write it off in year 11 as zero value.
If you're thinking of going down a route of conducting long-term fraud, then be very careful. Few accountants would sign up to help you with it.

[Fred Bloggs]

Assets can appreciate as well as depreciate. Not everything reduces in value over the course of the time you own it. It's highly likely that a property asset would increase rather than decrease in value over the period it is owned.

You would need to revalue the property on an annual basis, just like you revalue your computer equipment by running depreciation journals.

With something like property an assessment would be done against the actual sale price of comparable properties in the area. IANAA but I would look at the whole property (office + dwelling) value and compare the change in value since date X when the office was built. Then attribute the change in value according to sqft so if the office is only 5% of the total sqft of the whole property then its value is adjusted by 5% of the total change in value (it makes sense in my head but I may have explained badly).

Funny thing. Bloggs estate had a garden room installed about three years ago. It's basically just used as a posh shed. But it's far better looking than a basic shed. Nonetheless, today, the exact same timber building would be at least 2x what we paid for it. Might have a hard time explaining how it has depreciated when it's still in perfect condition?