188体育

CAA01/S68

A person who has been treated as the owner of an asset by CAA01/S67 (CA23310) is treated as ceasing to own the asset if they cease to be entitled to the benefit of the contract without becoming the owner of the asset. The cessation of ownership happens when the person ceases to be entitled to the benefit of the contract. This means that that person is required to bring a disposal value to account. These are the rules about disposal values:

If the asset has been brought into use for the purposes of the qualifying activity the disposal value is the total of

• capital sums received as consideration, compensation, damages or insurance for the persons rights under the contract or the asset or the asset, and
• expenditure treated as incurred when the asset was brought into use but not yet incurred

Example

Mary buys a combine harvester for 拢70,000 on hire purchase. She pays a deposit of 拢30,000 and then four annual instalments of 拢10,000. She brings it into use immediately. After she has paid the deposit and the first instalment she sells the combine harvester to Neil by assigning the contract to him for 拢35,000. When Mary brought the combine harvester into use she was treated as incurring all four annual instalments of 拢10,000. When she assigns the contract she has still to incur three annual instalments. Her disposal value is 拢65,000 = 拢35,000 received for assigning the contract + 拢30,000, the three instalments yet to be incurred.

If the asset has not been brought into use the disposal value is any capital sums received as consideration, compensation, damages or insurance for the person鈥檚 rights under the contract or the asset or the asset.

Example

If Mary had not brought the combine harvester into use before she assigned the contract to Neil, the disposal value would have been 拢35,000, the amount she received for assigning the contract.