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bigduckontax, Accountant
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I have a query with regards ***** ***** sales. My Ltd

Customer Question

Hello
I have a query with regards ***** ***** sales. My Ltd company is intending to purchase websites (3 in total) from another Ltd company.
What I want to know is two things:
1) Both companies are VAT registered, so I believe website sales are included within the remit of VAT, please confirm?
2) The more important question is this - how are website sales treated? Does it go down as an advertising expense, or something else? What category do they fit in with regards ***** ***** etc.
Essentially the idea of buying the websites is so we can generate leads in the specific sector the websites are in - so in the long-run buying the sites will save us money as opposed to building our own, since they are already running and generating leads.
If any clarification is needed, let me know.
Thanks
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Firstly, supplies of these services are a standard rated supply, unless made within the EEA using the reverse charge system or for exports outside the EEA when they are zero rated. From the tenor of your question I would suggest that the purchase of these items would be classified as plant and machinery, the definition of P & M is exceedingly wide. If bought before December this year they would come within the Annual Investment Allowance and be allowed at 100%. Alternatively the cost could be passed through your accounts as part of the cost of sales. Quite frankly the method used is as long as the proverbial piece of string, akin to the medieval argument as to how many angels can danve on the point of a needle! I do hope my reply has been of assistance. I would not be over concerned whichever method you used. In the words of my old boss it doesn't alter the price of cheese.
Customer: replied 1 year ago.

Hi Keith

Thanks for breaking it down...and I also appreciate the sense of humour!

So yes to VAT.

And with regards ***** ***** second part, either way - whether an outright expense or AIA, basically we can basically deduct 100% and won't have to pay corporation tax on that amount?

If buy purchasing the websites, we make a loss this year, these losses will be deductible from profits in future years?

Thanks and that's about it

Expert:  bigduckontax replied 1 year ago.
Yes, you could play it both ways at present. If HMRC jib at it being 'plant and machinery,' you just put it through as cost of sales, the answer is the proverbial lemon and as far as HMRC is concerned to not allow AIA is an exercise in financial futility, akin to rearranging the deck chairs on the Titanic!
Yes, losses of this nature can the carried for ward for corporation tax purposes indefinitely. Indeed, they can, providing that the same trade is being undertaken, be carried back one year also [see CTM04510, here for full details]:
http://www.hmrc.gov.uk/manuals/ctmanual/CTM04510.htm
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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3613
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 1 year ago.

Haha! Excellent, thanks for the succint and helpful answers

Expert:  bigduckontax replied 1 year ago.

Thank you for your support, delighted to have been of assistance.

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