Annual Investment Allowance HELP PLEASE!!!

[macker13]

Hi there,

I have a situation to conquer....can anyone help??

One contractor does the work on 4 farms. He has already used his 100k AIA but wishes to get a new £100k machine eligible for AIA.

Could the owners of the 4 farms club together 25k each to buy the machine instead of the contractor. Then they claim their AIA so save tax at their tax rate, then rent the machine back to the contractor who would then save tax at his tax rate as the rent for the machine would be allowable.

The machine would only be used on the 4 businesses.

Any help appreciated!!

Many thanks

[tom 7000]

A four person partnership machine hire business or Ltd co?

I would be over the moon with that means I dont have to pull 100k out of my pocket and just pay a rental, preserving cashflow. I wouldnt have to pay any interest either, well suppose it depends on the rent rate.

You will have to register the new business for vat or you will lose this , but I am guessing the contractors vat registered and not on flat rate.

What happens if the contractor quits, 4 Farmers have a big machine...well they could hire someone to service themselves...so that seems ok.

Yep seems ok to me

[tom 7000]

might effect AIA of 4 farmers are they using theres? Need to check this I cant remember off the top of my massive head . Also AIA limit is changing soon?

[macker13]

farmers all individuals not companies and wont use their 100k allowance otherwise.

The main thing I was worried about was exclusion 4 on HMRC website regarding anti avoidance. However I've done lots of research into this and had 2 meetings now with other qualified accountants (I'm acca) and we all feel its ok.

All businesses involved are VAT registered already as they are farms under contract farming agreements so VAT is already ok to be claimed back too!