Van for Sole Trader

[DMES]

Hi,
For background; I am a sole trader preparing accounts on a traditional basis. This is my first year of trading and, whilst I have made a profit during the year, due to start-up costs I will not breach my personal allowance and, thus, not pay any tax in this year.
During the year I purchased a van purely for business use knowing that there were faults that needed repairing. The van was purchased from my Brother-in-Law for £2k, the trade book value of the van based upon the model, age & mileage was given to me by my insurers as £4.5k. I spent £1.7k rectifying the faults known on purchase.

My question is this; what value do I transfer the van into the general pool at? is it £2k and charge the £1.7k repairs against profit in the year? Do I assume that I have purchased the van and repaired it then transferred it into the business at the book value advised by my insurers (documented)? - I have no capital gains chargeable in the year so this would not be an issue.

Obviously I would rather carry as much of the cost forward in order to benefit in future years as I fully expect to be paying income tax from my second year of trading.
Thanks in advance.

[robbob]

You fall into the wastelands of borderline guidance here - the £1.7k expense could be either revenue related (repaIrs) or be deemed to be part of the cost of the asset - the detailed facts of the situation will decide which side of the line your are own

BIM46935 outlines the main principles here so best to read the whole page and make a decision based on what you feel mosts reflects your exact situation.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46935

Having said the above i think its highly likely the whole cost of the item is capital - you have confirmed you purchased the van with known issues that i am presuming you knew would have significant costs at the outset judging by the figures you have quoted this being the case you should be able to treat the whole cost as capital based on the following reasoning outlined in bim46935.

Pointers to the expense being part of the cost of acquiring the asset and not allowable as a deduction include:
the asset could not be used in the business without being repaired; or
the asset could only be used in the short term and its long term use was dependent upon the repairs being carried out; or
the purchase price of the asset reflected the fact that the asset needed repairing to be useable.

[DMES]

Many thanks for your reply robbob,
The guidance in BIM46935 was exactly what I was looking for.
Cheers
Dale