Dual purpose bore hole and equipment

How much would you allow for a bore hole and system to provide water to a private house and business

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A client has a house where the water pressure is very low.  She has had a bore hole and acessories fitted in order to get a regular supply.  The supply will serve the house but also the purpose built shed and stores where food stuffs she sells are stored and packed into smaller packages for onward sale.  Due to the nature of the food stuff, cleaning the surfaces is vital as is washing down of the vans.  4 or 5 staff are at the premises for 3 days a week.  The total cost is approximately £8000.

Is this a capital cost or could the accessories which are over £5000 be allowable for capital allowances and if so what percentage.  Only two people live in the main house

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paddle steamer
By DJKL
24th Feb 2017 11:08

There certainly will be some apparatus akin to plant involved. Whilst no expert our system (abroad) has the pump (at foot of borehole now, used to be an old surface draw pipe in cellar) fair distance of rubber type tube, lengthy electrical cable to pump, pressure vessel and filtration kit, plus various isolating/drain valves within the plumbing.

The actual hole in the ground, sleeve, cap etc not sure, would need to think further.

You do not say, but what type of business (Sole trader/company) and what is its tenure re use of the shed/outbuilding.

Does it have a lease and what does said lease say re responsibility for repair/renewal of services? (presume shed had water supply ex mains before this installation)

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By chancewind
24th Feb 2017 11:21

The business is a partnership owned by the house owners,no lease of the shed and other specialist storage ie underground store to keep goods at even temperature. Any repairs to the shed and fixtures i would presume would be claimed and vat and capital allowances on it.

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Replying to chancewind:
paddle steamer
By DJKL
24th Feb 2017 11:42

You client could be in Sweden, half the houses there have a Jordkallare. (see my picture for one of them)

https://sv.wikipedia.org/wiki/Jordk%C3%A4llare

You mentioned purpose built sheds, how was their cost treated in the books of the partnership?

What about the creation of the underground storage space?

Is this maybe an agricultural property or has it been in the past?

How were these sheds dealt with re planning/ warrants/ permissions?

Are they assessed for rates as commercial property?

How are premises/stock insurance etc dealt with re sheds, is there public liability/employer liability?

Did the bore hole replace the previous connection re water or augment it, was the previous supply mains or a different borehole ? (I have two boreholes, the old one that I believe ran dry before we bought the house and the newer one we currently use)

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Replying to DJKL:
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By chancewind
24th Feb 2017 12:31

The sheds were already there, i will ask about planning for the underground store, rates are only on the old farmhouse. If it was agricultural property it has not been for at least the last 25 years

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Replying to chancewind:
paddle steamer
By DJKL
24th Feb 2017 13:13

So, the business did not build the sheds, they were there when it started operations.

The business has no ownership of the shed nor tenure/obligation to use them.

The sheds do not appear to be distinct assets from the house and garden.

The sheds presumably do not feature within the partnership accounts.

You do not say where all the borehole equipment is located, is it in the house? Is there merely a pipe from the house running to the sheds that has always been there, in effect merely the system to get water into the house has changed?

If the cost is a capital expense I am struggling to see why the business could make any claim, it is likely not located within the building used for the business, it is fixed, and I am really not sure if a plant/ integral fixture claim can really be valid in the circumstances.

Where the expense can be seen as replacing existing services there is at least an argument for repair and a reasonable apportionment re use/floor area/ whatever might follow.

If a replacement for an existing borehole then revenue treatment is maybe possible, if replacing existing water supply with more suitable system might try the double glazed window argument, but where augmenting say existing mains as an extra/addition likely not a repair.

To get repair treatment I think you would have to argue that the entire water system of the house and garden was part of asset, house, and sinking a borehole and pump was repair to same rather than an asset in own right.

Hopefully someone better versed re capital allowances will come along to assist, I am really doubtful a claim may be made re CA but am well outwith my comfort zone here without doing some significant reading.

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