Claiming VAT back on flat rate scheme. (£2k+ purchases)

[northernladuk]

Yep, ASB is on the right track here. Assets are treated in two different ways;
(1) In your accounts, generally the asset becomes part of the main Plant & Machinery pool - which is usually depreciated at 20% per annum straight-line, so after 5 years, the carrying value of the asset is nil;
(2) Corporation tax - Depreciation is not an allowable expense for corporation tax purposes, so any depreciation deducted in the accounts needs to be added back to the Net Profit figure for the corporation tax calculation. For corporation tax purposes you use capital allowances - so the full cost of a £5,000 asset would be tax deductible in the year of purchase under the current rules. If you sell the asset after 2 years for £1,000, then a balancing charge (think of it as a reverse capital allowance) of £1,000 is made in the corporation tax calculation - the overall result being you have enjoyed tax relief on £4,000.

Make sense? And by the way, congratulations on your CUK award!

It does and thank you very much

What happens to the item after the full depreciation period but it still has a value? Written off to the company but can still be sold of £x.xx

[Greg@CapitalCity]

Any profit or loss made on the disposal of an asset is reported in the company P&L account.

Say after 5 years the book value of your asset is £0. Then, if in the sixth year you sell it for £500, then a £500 profit is realised in the P&L under Other Income.