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Thanks Sam - yes I am getting a little mixed up as the assets being transferred to the company are £166k of plant and machinery that are financed with £100k of hire purchase, and then a bank overdraft of £15k 25k of debtors and some other minor balances that make up an overall net asset position of £59k - the sole trade has always been very distinct and separate with its own balance sheet so these assets/liabilities are purely business related - so all I want to do is transfer the assets into a company both plant, debtors, creditors, and the HP loan balance
Thanks - so when I incorporate a sole trade, can I not just sell all the assets and liabilities to the company then?
Hi - what about a joint election under s266 to transfer the plant and machinery at tax wdv would that work and avoid the balancing charges?
thats great thanks - reading the HMRC guidance it would appear yo can make the election and in this instance the sale or transfer price is ignored...so technically you can transfer the plant and machiner over for £166k which would sit on the Directors Loan account as a credit, but the tax wdv would be zero (which is the case here as AIAs have been claimed previously)...Appreciate you get a charge if you sell assets - but they normally swap out with new ones....you could then I assume draw funds against the DLA to settle the personal HP liabilities held correct and as you say pay them off
if you can confirm thats a fair interpretation I would be very grateful thanks for all your help
The reason I asked is because the guidance says "When an election is made any sale or transfer price is ignored"
My point being there are two values here - one is the tax written down value for capital allowance purposes which is zero...and one is the actual sale price....
so yes I appreciate from a capital allowance perspective the WDV pool is zero, but why not then sell the assets at market value eg the £166k and make the election from a tax perspective of zero? - the accounts would then show fixed assets of £166k and a DLA of £166k credit as the sale of assets. The WDV would be zero as per the election
While I am an accountant, I don't deal in tax matters hence why I use this site to ask questions as and when they arise on personal issues or from friends - I apologise for the basicness of the questions..but thats what I pay my subscription for....and when I do ask questions I do like to know the reasoning behind the answers. My whole premise behind my questioning is that I want to incorporate business assets and liabilities in total with the exception of a car, and there must be a way of doing this - thanks Craig