Reply to: Closing my Ltd - bicycle disposal

[Craig@Clarity]

Ok, even given that the bike will have devalued?

Yes.

[Rafd]

Yes it would be allowed. All I'm saying is there is no tax advantage to gain from claiming AIA if you're going to get rid of the bike when you wind the company up as you'll be hit with a balancing charge.

Ok, even given that the bike will have devalued?

[Craig@Clarity]

Thanks for the help, apologies for being a dunce but I don't totally follow as this stuff is new to me. So if I keep the company open for a further year, the claim for AIA would still not be allowed?

Yes it would be allowed. All I'm saying is there is no tax advantage to gain from claiming AIA if you're going to get rid of the bike when you wind the company up as you'll be hit with a balancing charge.

[Rafd]

In terms of claiming AIA. A balancing charge deals with any overclaim of capital allowances so if you're looking to complete a financial year just to claim AIA in relation to the disposal of a bike before winding the company up, it makes not difference.

Thanks for the help, apologies for being a dunce but I don't totally follow as this stuff is new to me. So if I keep the company open for a further year, the claim for AIA would still not be allowed?

[Craig@Clarity]

In relation to starting another accounting period?

In terms of claiming AIA. A balancing charge deals with any overclaim of capital allowances so if you're looking to complete a financial year just to claim AIA in relation to the disposal of a bike before winding the company up, it makes not difference.

[Rafd]

From a corporation tax point of view it makes no difference.

In relation to starting another accounting period?

[Craig@Clarity]

Thanks, sorry I meant AIA not capital allowance. What I meant to ask was whether it is possible to deliberately keep the company open a little longer in order to start another accounting period and file a new set of accounts which would mean the purchase would no longer be within the final period and so qualify for AIA.

From a corporation tax point of view it makes no difference.

[Rafd]

Write it straight off to the P&L and post the proceeds to the same account to either create a profit or loss on the disposal of the asset. There won't be a balancing charge as you've not capitalised it or claimed AIA on it as it all happened in the same financial year. If you're buying the bike off the company yourself, you'll need to put a price on the bike. What is the price? How much would you sell it on the open market? Have a look at ebay etc and value it that way.

Thanks, sorry I meant AIA not capital allowance. What I meant to ask was whether it is possible to deliberately keep the company open a little longer in order to start another accounting period and file a new set of accounts which would mean the purchase would no longer be within the final period and so qualify for AIA.

[Craig@Clarity]

Would a transaction like that not prevent the company from remaining dormant?

The ideal option would be to keep the company going until the bike is over a year old and so will qualify for capital allowance. Can anyone tell me if this will work - my last invoice was end of April. Is it this date that counts as 'cessation of trading' or can I decide the date myself?

Write it straight off to the P&L and post the proceeds to the same account to either create a profit or loss on the disposal of the asset. There won't be a balancing charge as you've not capitalised it or claimed AIA on it as it all happened in the same financial year. If you're buying the bike off the company yourself, you'll need to put a price on the bike. What is the price? How much would you sell it on the open market? Have a look at ebay etc and value it that way.

[Lance]

Would a transaction like that not prevent the company from remaining dormant?

I'll google it for you shall I? Dormant company: what must a company do to stay dormant?

[Rafd]

monthly bike insurance?

Would a transaction like that not prevent the company from remaining dormant?

The ideal option would be to keep the company going until the bike is over a year old and so will qualify for capital allowance. Can anyone tell me if this will work - my last invoice was end of April. Is it this date that counts as 'cessation of trading' or can I decide the date myself?

[Lance]

Apparently with Mettle "To get FreeAgent for free, all you have to do is make at least one transaction a month from your Mettle account". I guess it is ok to just transfer money in then out again and keep the company dormant?

monthly bike insurance?

[Rafd]

no law in the land says you can't use the bike.
There is arguably a BIK cost, but new rules mean this isn't an issue as long as you bought the bike for mainly business use originally.

Sign up for Mettle/NatWest banking as you get FreeAgent for free.

Apparently with Mettle "To get FreeAgent for free, all you have to do is make at least one transaction a month from your Mettle account". I guess it is ok to just transfer money in then out again and keep the company dormant?

[Rafd]

Thanks for the heads up about RBS, I've been wasting a lot of money on FreeAgent!

It was about 3k including VAT.

[Lance]

Yes I've considered this though legally I would not be able to use the bike during this period I imagine. It would however mean I have to keep paying my FreeAgent subscription. Are there any other pitfalls to this approach other than the hassle of dormant co accounts?

no law in the land says you can't use the bike.
There is arguably a BIK cost, but new rules mean this isn't an issue as long as you bought the bike for mainly business use originally.

Sign up for Mettle/NatWest banking as you get FreeAgent for free.