Readers’ forum: Tax relief on car dealership stock

I have recently taken on a client that operates a car dealership through her limited company. The nature of business is very straightforward – the company purchases new and used motor vehicles occasionally undertakes some repair work and sells them to customers of the public. Cars are typically held in stock for a couple of weeks and up to six months.

Common sense for what it is worth dictates that tax relief will be available on the cost of motor vehicles purchased and sold in a given period – just in the same way it would have been with any other goods – that is the profit calculated based on UK GAAP would be subject to corporation tax.

I was wondering however whether there are specific provision that in effect treat cars as ‘other’ assets for the purpose of tax relief...