7539

[966]

7539 was involved in a RTC today. First and Foremost hope everyone involved is ok but having seen the damage, what will the chances be of it being repaired. Understand it's only just happened so will be a few days before it's properly assessed but it looks like it could be quite expensive as the floor looks badly damaged.
With it being new I would imagine it would be worth the repairs but with no knowledge of this world it would be quite interesting for an opinion of someone who does!

[mark114]

That really would depend on the repair cost i am on the understanding that if it exceeds the cost of the vehicle then some kind of decision will have to be made on if it's even worth repairing

[D10]

As this is a fairly new vehicle, I would think that the repairs although extensive will be justified as the Net Book Value of the bus would be too much to just write off.

Not clear exactly what happened though and if it wasn't the NX drivers fault and there was another vehicle involved and at fault then their insurers will be liable anyway to pay.

[sandboy20]

According to the Coventry Telegraph (Dec 28) " a spokesman for National Express
Coventry would like to apologise to anyone inconvenienced by this incident" Does this
indicate NX Coventry accepting responsibility or is it just another saccharin public
relations automated response.
Incidentally, shame it had to happen to the newest bus in the fleet.

[Tony]

Now at Plaxtons, Anston for repairs

[richardjones210368]

As this is a fairly new vehicle, I would think that the repairs although extensive will be justified as the Net Book Value of the bus would be too much to just write off.

Not clear exactly what happened though and if it wasn't the NX drivers fault and there was another vehicle involved and at fault then their insurers will be liable anyway to pay.

Not necessary if the bus was bought using the HMRC AIA Allowances then the whole ammount is written off by the annual investment allowance in.Yr1 and so capital allowances are not claimed for year 2 onwards therefore although still an asset the NRV is shown as £0 as the value of asset has been.written off in.Yr1 Using either Capital Allowance or AIA method the repairs are justified as these would be claimed against Advance Corporation.Tax in Trading Profit and Loss Account as Repairs. Tax Relief of 19% would be claimed on the repair leaving WMT only to foot 81% of the cost this ammount remaing would be offset against final Corpration Tax at 19% marginal relief  so overall WMT only enccur round about 54% of the cost of the repair overall against its overall tax bill due so why wouldnt you repair a new nearly bus when you are only paying for half the repair in effect although other adjustments may be due?

[paul82]

Not necessary if the bus was bought using the HMRC AIA Allowances then the whole ammount is written off by the annual investment allowance in.Yr1 and so capital allowances are not claimed for year 2 onwards therefore although still an asset the NRV is shown as £0 as the value of asset has been.written off in.Yr1 Using either Capital Allowance or AIA method the repairs are justified as these would be claimed against Advance Corporation.Tax in Trading Profit and Loss Account as Repairs. Tax Relief of 19% would be claimed on the repair leaving WMT only to foot 81% of the cost this ammount remaing would be offset against final Corpration Tax at 19% marginal relief  so overall WMT only enccur round about 54% of the cost of the repair overall against its overall tax bill due so why wouldnt you repair a new nearly bus when you are only paying for half the repair in effect although other adjustments may be due?

This is not strictly correct.  The AIA is a tax relief giving 100% relief in the first year so for tax purposes the tax written down value could be £0.  As the AIA is limited to the first £1m of asset spend, it could be argued that even for tax purposes the bus would still have a value as tax allowance would be restricted to the less generous writing down allowance of 18%
The accounting treatment would be different with the bus written off overs its useful life so as a new vehicle it would still currently have a high net book value.

[richardjones210368]

This is not strictly correct.  The AIA is a tax relief giving 100% relief in the first year so for tax purposes the tax written down value could be £0.  As the AIA is limited to the first £1m of asset spend, it could be argued that even for tax purposes the bus would still have a value as tax allowance would be restricted to the less generous writing down allowance of 18%
The accounting treatment would be different with the bus written off overs its useful life so as a new vehicle it would still currently have a high net book value.

I wondered who would be the first interpret the rules like that HMRC I based my  response on case I was asked to take to 1st Tier Tribunal to HMRC & won if you take the tax statute as written the marginal CT relief is at the underling Corporation Tax level which is 19% yes the CA relief is 18% but if don't use the CA method and claim the relief within the year against ACT you can claim 19% the relief can be rolled over therefore an underlining relief of 38% can be achieved if the repair is aggregated over a 2 year period there is nothing in tax law showing that part of the repair has to be shown in a full year in FRS102 it can be shown partly as an accrual and staggering over two accounting periods although there is a £1m allowance on the AIA yes but using & applying the AIA would apply to smaller operators unless there was dispensation from HMRC everyone accepts the 18% but that is a smokestream I was asked to take a case to tribunal on the principle outline and HMRC lost using the method I outlined. The bus would have a £0 NBV if the AIA method  was used only shown as a positive NBV if a PLC used its own Write Down Value the 18% is the HMRC Write Down Value but its up to the PLC to decide its own Write Down Value yes 18% is the HMRC but most bus operators set their own write down values and show it as an adjustment in the accounts if its set a 25% then 18%is claimed in the CT600 as a capital allowance the other 7% is within a Balance Sheet adjustment and shown as a note to the accounts.The bus would still have a NBV for tax purposes on.the CT600 as zero which I ment but still shown as an.asset.on the balance sheet perhaps I didn't make that clear Apologies. I agree with the principle of your comments that the bus would still havre an asset value on the balance sheet on the accounts submitted to Companies House but not on the CT600 to HMRC as the tax adjustment.on which the overall tax liability would be calculated which is why put the caveat of subject to adjustments on my post.

[paul82]

I don't want to argue over the details of accounting/tax treatment but unfortunately I don't agree or understand some of those points, but the I'm only an accountant so probably understands figures better than words!

[richardjones210368]

I don't want to argue over the details of accounting/tax treatment but unfortunately I don't agree or understand some of those points, but the I'm only an accountant so probably understands figures better than words!

Ok mate thats fine everyone has argued with every point I have raised since joining the forum so we might as well move on to The Corporation Taxes Act of 2010 & and argue about the principles of that and give @Tony a well earned rest from the X8 you werent a Ludlows user were you?  I fully respect you as an accountant which whether you are ICAEW, ACCA, CIMA or AAT. I too am only an accountant employed by accountants to take cases to Tribunal because of my knowledge of staute and tax law we all play our part in our great profession. I am pleased as a fellow professional  you cant follow my argument I find it strange though as its a simple case of rollover relief you cannot follow the theory without figures but think if you cant follow my argument of how I have applied The Corporation Tax Act 2010 under the Tax Mangement Act 1970 as applied to relevant section of FRS102 neither would HMRC!