When a trade ceases, capital allowance balancing events arise, as well as other tax events.
The software supports the capture of the trade cessation date and will ensure that all capital allowances are treated as disposed of in the period of cessation.
Trade cessation date
To input the trade cessation date, navigate to the Trading Income window and input the date in the Trade Cessation column.
Where a trade cessation date is entered which does not match an existing end date for an AP on the system, the Edit Accounting Periods window will be displayed on screen. This will suggest start and end dates for APs based on the cessation date just entered.
The AP end dates can be changed by either typing a date in the box or selecting the arrow to access the calendar. There must be an AP date which agrees with a trade (or all trades) starting or ceasing for the OK button to be available.
If OK is selected, the AP dates shown will then be applied to the Tax Return. The Tax Return will close and reopen automatically, which will allow the AP changes to be made.
If Cancel is selected, the date entered which invoked the Edit Accounting Periods window will be deleted and revert back to the previous state (i.e. if a date was previously entered then this will show, otherwise the field will go blank).
If there are multiple trades, the Edit Accounting Periods window will only show when all dates in a column have been completed.
The system may not always suggest the correct APs where a company has one trade which ceases in the year and starts a new trade after the first has ceased (i.e. trading, non-trading and trading periods). In this case, care must be taken to make sure the APs are correct and you may need to manually amend them.
Inputting a trade cessation date will force each capital allowances window to treat all assets as disposed of in the final period.
At this stage, each asset is treated as having a disposal value of nil.
Balancing allowances will be calculated for all assets with a TWDV.
To calculate the actual tax position on cessation, manually enter any actual disposal proceeds into each asset window.