This article, "Money paid to a lender by an insurance company," originally appeared on AccountingWeb.com.
Appreciate, if anyone in this forum could advice on below issues, I am facing.
My client has financed a business van three years back. The vehicle met with an accident and insurance company writtn off the vehicle and paid outstanding loan amount directly to the lender.
Can we treat the money paid by insurance company to the lender for outstanding balance as Sales proceeds in order to calculate the loss/profit on disposal?
If we treat as money paid lender as sales proceeds, is it subject to VAT and VAT payble? (since my client is VAT registered)
My client has claimed AIA for the full amount. What adjustment we have to carry out in the Capital Allowance calculation in the current tax year as insurer has settled the outstanding to the lender.