amendement to 2007-2008 tax return

foxy-lady

Morning,
I'm hoping someone can advise me please.

My husband and I have recently learned that we can claim capital allowances for a minibus we purchased on 25/04/2007. The cost of the minibus was 12,150 and we took out a personal loan, the final payment will be in May this year. WOO HOO! We have claimed the interest payments each year on our tax return.

We think this is the year that the rules changed from claiming 50% in the first year to claiming the full amount.

We are going to request an amendment. My question is this- do we have the choice of having the 100% value for that single tax year or a lesser percentage value over subsequent years. Would that will mean submitting several tax year amendments?
I think the later option would be better for us as we earned around 11k during 07-08. The business has increased steadily over the years and this year we have earned just over 16k.

Thanks

xx

ncthomas1

Whoooa hang on! You are talking about getting the tax return entirely restated? Scary
Are you talking about AIA may be? (Annual Investment Allowance) if you are, if I were you, I would read the AIA rules on HMRC website before doing anything else!
Don't forget, if you sell/ dispose of an asset and you have written the value down to zero, then there will be a balancing charge and you could end up owing money back at some point
I would just advise 2 things, tread VERY carefully if asking HMRC to resubmit returns 07/08, 08/09 (which is two separate years) and tread even MORE careful if you decide to claim AIA rather than capital allowances
IMHO, I would go for 20% Capital allowances over 5 years to be on the safe side

foxy-lady

'IMHO, I would go for 20% Capital allowances over 5 years to be on the safe side'

So we do have the choice?

I would prefer to do what you advise also.

Is the next step still going to be for me to submit an ammendment for 07-08?

xx

foxy-lady

After reading and reading I have come up with the following figures, does this seem right?


12150.00
07/08 50% 6075.00 6075.00
08/09 20% 1215.00 4860.00
09/10 20% 972.00 3888.00
10/11 10% 388.80 3499.20

adi2402

Just a quick question. If the business a sole trade or partnership. If so have you produced accounts and if you have did you introduce the van into the business. I just mention this as you say that it was purchased in a loan in your own name.

If you have submitted accounts with HMRC you may not have introduced the asset into the business and as such you may also need to lodge amended accounts also.

Also I assume you have made profits and paid tax since you have purchased the asset. If not it may be an option to start claiming the capital allowances from next year.

Also consider adjusting your capital allowance claim for any personal use that you may have on the Van, a percentage should be added back in relation to the capital allowance claim if there is any personal use.

chrismac1

I can see a slight problem here. If you submit a tax return with an error on it, you have until the second 31 Jan following the end of that tax year to correct that submission. In this case, the first year you need to correct is 07-08, so you had until 31 January 2010 to correct that. Tomorrow you are exactly 1 year too late. If you want to re-submit 08-09, you have just over 32 hours st this precise moment.

adi2402

Correcting mistakes after 12 months

If you want to tell HMRC about a mistake after 12 months, it's too late to amend your return. You have to write to HMRC and make a claim instead. If you make a claim before April 2010, it's called error or mistake relief. From April 2010 it's called overpayment relief.
Getting a refund

In most cases, you'll get the tax you've overpaid back, as long as you claim it in time. The time limits for claiming a repayment are set out below. If you don't make a claim within the time limit you'll miss out on any repayment due.
Time limits for making claims Tax year You must claim by: 2004-05 31 March 2010 2005-06 5 April 2010 2006-07 5 April 2011 2007-08 5 April 2012 2008-09 5 April 2013 2009-10 5 April 2014 If you think a repayment is due you'll need to tell HMRC how you'd like to receive it.
For convenience you can have it deducted from any tax due on your next Self Assessment Statement if either:

• it's less than £10
• a tax payment is due shortly

Or you can ask for one of the following:

• a repayment direct to your bank or building society account - this is quick and secure
• a cheque, however this will take a little longer to reach you

Sometimes HMRC may ask you for more information - to make sure that the figures are correct - before making a repayment.

adi2402

Per below you have time to make the claim.

foxy-lady

adi2402 wrote: »

Just a quick question. If the business a sole trade or partnership. If so have you produced accounts and if you have did you introduce the van into the business. I just mention this as you say that it was purchased in a loan in your own name.

If you have submitted accounts with HMRC you may not have introduced the asset into the business and as such you may also need to lodge amended accounts also.

Also I assume you have made profits and paid tax since you have purchased the asset. If not it may be an option to start claiming the capital allowances from next year.

Also consider adjusting your capital allowance claim for any personal use that you may have on the Van, a percentage should be added back in relation to the capital allowance claim if there is any personal use.

The minibus was purchased to use for airport transfers. My husband is self employed. The finance was a personal unsecured loan in his name from our bank.
Since buying the minibus he has claimed for the running costs and the interest on the loan each tax year. That is all. The purchase price was 12,150.

Within 18 months the business was doing so well he then purchased a second vehicle (sept 2008, 3k) and I started driving for the business as our youngest child had started school full time. The second vehicle is a people carrier so comes under different rules from what i understand?

Again, he has only claimed running costs and interest payments on the loan.

These vehicles have no personal use, we have another car for the family to use.

We have made profits and paid tax since starting the business.

Would it be best to go back and amend previous years or can we just claim AIA for the minibus and capital allowances for the people carrier from now on?

Thanks for your help so far.

xx

adi2402

You won't be able to claim the AIA going forward on this asset as it was not purchased in 09/10 or 2010/11.

As you have paid tax in the previous year you really have two options one easier than the other.

It is optional whether or not you claim capital allowances in a given tax year, so you can simply start making claims from the 2009/10 or 2010/11 tax year in line with HMRC legislation i.e if you start your claim in 2009/10 you can claim a 20% capital allowance on the van.

You will also be able to claim the capital allowances on the people carrier.

Your second option is to claim the relevant allowances from the date of purchase. This will involve you lodging an amended return for 2009/10 (time permitting) and an error & mistake claim for all other years. This method would involve some correspondence with HMRC and the calculation of the relevant capital allowances. Wont be that difficult but will take a little time.

foxy-lady

adi2402 wrote: »

You won't be able to claim the AIA going forward on this asset as it was not purchased in 09/10 or 2010/11.

As you have paid tax in the previous year you really have two options one easier than the other.

It is optional whether or not you claim capital allowances in a given tax year, so you can simply start making claims from the 2009/10 or 2010/11 tax year in line with HMRC legislation i.e if you start your claim in 2009/10 you can claim a 20% capital allowance on the van.

You will also be able to claim the capital allowances on the people carrier.

Your second option is to claim the relevant allowances from the date of purchase. This will involve you lodging an amended return for 2009/10 (time permitting) and an error & mistake claim for all other years. This method would involve some correspondence with HMRC and the calculation of the relevant capital allowances. Wont be that difficult but will take a little time.

Thanks, i apreciate you taking such time with your replies.

I think i prefer to go with the first option.

Based on the 2 purchase prices am i right in thinking i can AMEND 08/09 tax year before midnight tomorrow with the following
bus 2430 + car 600 = 3030 capital allowances

Then
bus 1944 + car 480 = 2424 capital allowances
for 09/10 figures that we are also submitting tomorrow.

xx