HMRC demand Receipts for machinery

antrobus

To put it quite simply.

You have made a claim for capital allowances. HMRC have now requested evidence in support of that claim. They are quite entitled to do so, and it is down to you to provide that evidence. HMRC are quite correct, your efforts so far are irrelevant. Simply repeating the assertion that your valuation is correct is not evidence.

Type 'used woodworking machinery' or whatever into Google and go and find some evidence as to what your kit is worth.

Pennywise

As Jimmo has said, if the equipment isn't falling in value, you'll have to repay the tax allowances anyway when you come to stop trading as the opposite happens - you have to effectively sell the equipment to yourself and pay tax on the proceeds (reverse the allowances claimed). So it's only a matter of timing anyway.

But we do need to backtrack and again I ask for detail. What allowances have you claimed? Have you claimed 18% WDA or 100% AIA on the value introduced, and which years have you claimed it in. You confuse the issue by talking about year 3 when most of the CA claim would be in year 1.

You can't claim 100% allowance on equipment you've bought several years previously and used personally. You can only claim 18%. You can only claim the 100% in year of purchase or first year if you bought it purposely in anticipation of starting the trade. As I put in my earlier post, I can't see how you can make a larger claim in year 3 than year 1.

It wouldn't surprise me if you and the tax inspector are at cross purposes, maybe because one or other of you havn't read the other's letter properly. There's loads of scope here for mis-reading and mis-understandings. Have you actually spoken on the phone to try to clear it up?

As the previous poster said, if everything really is right, the right allowances claimed at the right time, then you need to "Prove" the value of the equipment introduced. These days that's easy to do via the internet - find similar listings on ebay or other online sources, print it off and send it back to HMRC as "proof" of the current market value of the equipment.

Considering that if the equipment isn't falling in value, any tax relief you get is only temporary and will have to be repaid upon closure of the business, is it really worth claiming what is only a cash flow timing issue? Ultimately, if you can't agree figures with HMRC, you'll have to go to tribunal - is it worth the time and expense?

Anyway, what is the value of the tax relief you're talking about anyway?

Cook_County

Receipts are not required. This is an old chestnut. HMRC officials frequently ask for things that have no legal basis. You are simply required to provide accounts that take a true and fair view. However HMRC can still - rightfully - challenge your figures and the kind of claims you have made for tax purposes.


You are required to keep records and only to make claims in accordance with the law. Have you thought of paying for advice from a Chartered Tax Adviser?

SeniorSam

You have answered your own problem in saying you did not submit the true price you paid, but what you considerd to be the true value. Even if you buy something that is an absolute bargain and worth (in your opinion) several hundred pounds more, you can only submit the cost that you paid. This is where you seem to have slipped up, but as others have said, it should not be so difficult to find some documemntation showing the price you actually paid. That would satisfy the Revenue.

If not, then I would suggest you consider the initial purchase part of the hobby you have so much enjoyed and write that cost it off.

Alex

prowla

Marktheshark wrote: »

If they were bought personally, then sell them to the business.
Write receipts, your own property is now an asset of the business.
Think of the business as a third party and you as an employee.

Just what I was thinking.

SeniorSam

Just dont try to sell them at an inflated price or the tax man will be after you again. In any event he may look to see if there is a capital gain, which I doubt unless the figures suggest it.