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Oh, all right. So actually we make a difference only if the car is used by the director. In any other cases it goes to the P11D as chargeable benefit but no direct effect on the capital allowance itself. Is it correct?
My understanding is, that because these small businesses are allowed to file their VAT return only once per year (instead of quarterly), HMRC try to “predict” their VAT liability based on the previous year and ask a “prepayment” before the actual calculation becomes available.
After 9 monthly payments, the business submits their VAT liability and the difference needs to paid as a balancing payment.
I didn’t get anything, either. I was told it would be sent 2 weeks before the exam date so probably need to chase them…
AAS is available for small businesses only, meanwhile the quarterly payment is the generic rule. AAS allows to do VAT calculation once per year and not quarterly as any other businesses. On the other hand the businesses in AAS need to make a monthly – let’s say – “pre-payment” based on their previous year’s VAT liability.
In case of Jump Ltd., 9 monthly payments need to be done. The first payment is due at the end April, the amount is based on the last VAT liability figure – £3,600. So the payable amount is £360 per month until the end of December.
Then they calculate their VAT liability and the difference between what they paid so far and the total figure. They paid 9x£360=£3,240 up to 31/12/2014. The difference is £3,821-£3,240=£581 which is payable after the 2014 VAT return is made.The due date is 10/10/2014. In order to be able to claim a relief, at least 6 months needs to be elapsed from the due date, so the relief can be claimed after 10/04/2015.
As he prepares quarterly VAT return, my answer would be 31/07/2015 which is the end of that quarter.
One additional thing about the assets, which the roll over relief applies to (I just read about it yesterday):
as you said, it doesn’t apply to “depreciating assets”. Depreciating asset means an asset with an expected life of 60 years or less at the time of acquisition. This can be for example leasehold land and buildings or fixed plant and machinery, too.
So be careful with the identification of the asset.
If it’s a depreciating asset, the date of the gain when it’s earned is one of those 3 options that you listed in your first comment and this is called to hold-over relief.
Ok, let’s say you buy an asset without any relief, any connections, etc. Just a simple acquisition. When you sell this asset, you pay tax after the “selling price – buying price”.
When you have a roll over relief, we said, that you actually “postpone” the tax payment which would be due on the disposal. So, when and how would you pay the tax then? If we apply the calculation “selling price – buying price” on the replacement asset, it means, when you sell the replacement asset, you would walk away without paying the tax on the gain which comes from the disposal of the first asset. In order to not to be able to do that, you deduct the amount of the relief from the cost of the second asset. Which basically means, that it will be added to your gain and at that point you will pay the tax after both the first and the second disposal.
I hope it makes sense in this way but let me know if not, and I try to explain it differently. 😉
There is an “ask the tutor” forum here. Post your question there and see what they say. Now I am curious as well.
My understanding about roll over relief is that when you dispose a business asset, you have an income from it. If you have an income, you need to pay tax on it. However, if you buy a new asset for the same trade purposes, then this relief actually “identifies” the connection between the two transaction and in this way you postpone the tax payment till the disposal of the second (replacement) asset.
Assets which you can apply roll over relief are the followings:
– land and building
– fixed plant and machinery
– goodwill
– ships, air-, hover-, spacecrafts, satellitesIn case of disposing any other assets (these are probably referred in your notes as depreciating assets) you cannot claim roll over relief – even if you buy a replacement. So if you have gain on the disposal then a tax is payable on it and the date when the gain is earned is the earliest from those 3 that you listed above.
I hope it makes sense in this way.
Donation to national charity is disallowable expense – you need to add back to the profit.
What do we know about that rental? If it says that x months was not paid by the tenant, then it is an impairment loss – income which hasn’t been earned and no chance to be paid. In this way it’s an allowable expense. Does it give an answer to your question?