Corporation Tax and Writing of Company Van

My company bought a new Van this tax year using current cash flow.

Accountant says company can only write off 12.5% per year.

The company will show a profit this tax year, part of this profit will be the 88.5% of the cost of the van.

Accountant says because the company is showing a profit, the company will have to pay corporation tax on the profit including the portion of the van that cannot be written off.

Does the company have and options in that would prevent it from having to pay corporation tax on the portion of the van that cannot be written off?

Nope

GreenMan said:

My company bought a new Van this tax year using current cash flow.

Accountant says company can only write off 12.5% per year.

The company will show a profit this tax year, part of this profit will be the 88.5% of the cost of the van.

Accountant says because the company is showing a profit, the company will have to pay corporation tax on the profit including the portion of the van that cannot be written off.

Does the company have and options in that would prevent it from having to pay corporation tax on the portion of the van that cannot be written off?

Click to expand...

Have never seen an accountant describe a cost as a profit

Anyway OP: the reason the answer is no is because the van, being a capital cost item, must be written off in line with its use, wholly and necessarily, in the business.

It cannot be expensed, like a fill of fuel which is what you want to do

So the Revenue have deemed that 12.5% for the first 8 years and 4% for the last is the best way to allocate or apportion the capital cost of the van over its useful life in the business.
The accounting concept is call matching: in this case cost of van over the related income associated with its use over its tax life.

In passing: how is he treating the VAT on the van?

GreenMan said:

My company bought a new Van this tax year using current cash flow.

Accountant says company can only write off 12.5% per year.

The company will show a profit this tax year, part of this profit will be the 88.5% of the cost of the van.

Click to expand...

ircoha said:

So the Revenue have deemed that 12.5% for the first 8 years and 4% for the last is the best way to allocate or apportion the capital cost of the van over its useful life in the business.

Click to expand...

12.5% + 88.5% = 101%

(12.5% x 8 years) + 4% = 104%

Just a bit of Saturday morning pedantry!