Asset Management Review
In the Aviation, Property and Logistics fields I find that often a company owns some assets and may also manage assets of behalf of a third party. This is not uncommon, and if the costs surrounding these assets are treated correctly, can be both tax efficient and give piece of mind to the owners that their assets are being looked after professionally.
Sometimes however the assets in question are not straightforward, and sometimes neither are the owners’ intentions for use of the asset. This can be very important because accounting for the handling, maintenance and even changes to the asset can involve various types of tax and sometime in different geographical jurisdictions.
For example, a building being managed as a rental property will have a different tax treatment to that which has been purchased to renovate and/or have a change of use. Likewise an aircraft held within a company which belongs to the Owner/Director for private flights will have a completely different tax treatment to one that is owned and managed on behalf of a third party unconnected to the business.
It is worth noting that bringing any type of large asset within a company, either by purchase or transfer should be reviewed with regards to its tax implications long before any such transfer takes place, as it may be efficient for general maintenance and other cost management purposes but could incur prohibitive taxes and other issues (such as Insurances etc).
Maximising the benefits of your asset
When any asset is brought into a business, the intention is usually to maximise the benefit of that asset, when it becomes costly and time consuming to keep the asset it is definitely worth asking a professional to review your systems, processes and options before any disposal, to ensure that you have explored all avenues open to you. If you can plan for the asset ownership (or management) in advance, you are more likely to make the right choices to begin with, or at least to know what the tax and other cost implications are before any outlay is made.
How We Can Help – Asset & Float Management
Because of our interest and experience in the field of asset management, we are often asked to review either plans to hold assets within a company, or the current systems and processes for asset management to see if it is tax efficient and if the processes are effective.
When asked about the assets in question, one suggestion we often make is to account for each asset individually, this can take the form of setting up a new company to take over a property to manage its renovation, change of use or sale, or to literally separate all income and costs for that asset by department within the accounting software in use.
Sometimes we are asked to manage the assets income and expenditure on behalf of our client. This is usually because it can be a time consuming process by itself, the clients trade or business takes up most of their time and they appreciate that we will ensure that all relevant costs and deposits to cover costs are recorded correctly both for accounting and tax purposes.
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