What a Difference a Few Days Make

When a business is growing, it is quite common for it to be transferred into a limited company, and a company structure may often be more appropriate for larger businesses.

There are tax elections available which make such a transfer relatively easy to do for tax purposes, without giving rise to tax liabilities on the transfer.

However, the process is not completely straightforward, as a recent case illustrates. It involved an air conditioning engineer who transferred his business and business assets into a limited company.

When his cessation accounts to 31 March 2009 were prepared, the capital allowance claims were done on the normal basis and his final accounts included a claim for an annual investment allowance (AIA) for a new van.

Unfortunately for the man, the legislation does not allow for AIAs to be claimed in the final year of trade.

Had he waited until after his financial year end to transfer the business, the claim would have been allowed.

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