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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4183
Experience:  FCCA FCMA CGMA ACIS
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Ex &! Fixing second hand values of fixed assets, fire alarm

Customer Question

ex B&B! Fixing second hand values of fixed assets, fire alarm system, work on new bathroom including labour & fixtures, eg part of the building, where we have had to move out because the building did not belong to us.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Could you please expand on your question. I am unsure of what information you need.
Customer: replied 1 year ago.
We ran a B&B and have now retired however the house we were in belonged to an estate. Our accountant has sent us a list of written down value of Capital allowances. As we no longer live in the house do we have to put second hand values on improvements we made to the property when running the B&B?
Expert:  bigduckontax replied 1 year ago.
Ah I see!
When you dispose of these assets these capital allowance items reflect the sum you receive, if any, become a balancing charge if you make a surplus and go against you tax wise or, if you make a loss on the written down value, form a cost which can be set against profits in your final year's trading account.
These capital allowances are a bit of a pain as they can hang around for years being written off in dribs and drabs and sometimes newer items recently go at 100% capital allowance whilst an 'old and bold' is still trickling down in value. I have one of these in a couple of companies I represent.
Customer: replied 1 year ago.
We couldn't dispose of the assets as we didn't own the property but rented it. The estate wanted the property as a Holiday House so we have had to move into a flat on the estate, again rented. Because we were not benefiting from any work we did, I put the second hand value as nil. Our accountant is not happy with our valuation but has not made any suggestions.
Expert:  bigduckontax replied 1 year ago.
In that case you made a loss on the effective disposal of those assets so the entire brought forward balances on the capital allowance figures would be a loss in your final trading account. Effectively you sold them for nothing.
Customer: replied 1 year ago.
I'm sorry, not tax wise, does that mean that I was right to put the value as nil?
Expert:  bigduckontax replied 1 year ago.
In my opinion yes, you effectively sold them for nothing so the balances in your capital allowance account becomes a charge against your final accounts profit.
Customer: replied 1 year ago.
Thank you I will get back to the accountant
Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.