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Hotel in group, improvements and fixtures.

Group structure.  Topco owns shares in two subs.  SubA trades from a hotel.  The freehold of the hotel is owned by SubB.  SubB also has a trade of its own.

SubA has in the past year incurred £200k on groundwork improvements and £150k on Fixtures and Fittings upgrade.  I understand that SubA can claim CA's on the eligible equipment and can not claim much at all on the groundwork improvement.

In the accounts of SubA I am going to have Leashold improvements of £200k being the capital improvement. 

Q, if SubB comes to sell the hotel - where will it get its relief from the £200k spent by its sister company? i.e. does the £200k count as its qualifying expenditure?

Historically no rent has passed between the companies and no lease is in place.

In hindsight it would have been more straightforward had SubB paid the costs.


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27th Apr 2012 12:33

Aren't both...

... the hotel and the improvements disposed of (I haven't said sold on purpose) together?  So can't one or other company make an election under S.171A TCGA 1992?

Mine's a pint of Laguvulin please!

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