Planning consent not used - Can these costs now be treated as Revenue expenditure?

Planning consent not used - Can these costs now...

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Costs of obtaining planning consent were capitalised when incurred approx three years ago. Due to the economic downturn, the development was not deemed viable. The consent is soon to expire. Our client wishes to transfer these costs out of Fixed Assets and treat as revenue expenditure.

Is this allowed?

Replies (3)

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Teignmouth
By Paul Scholes
13th Sep 2011 19:58

The intent

Hi - Think it will depend on the intent at the time, and this doesn't change just because the purchase or development falls through, although a property development business (ie property trading) would put all the costs to stock and so it would be revenue.  Not here though it seems.

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Galaxian
By Galaxian
14th Sep 2011 16:26

HMRC's (questionable) view is that it remains capital

http://www.hmrc.gov.uk/manuals/bimmanual/bim35325.htm

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Nichola Ross Martin
By Nichola Ross Martin
14th Sep 2011 17:42

Capital by default

I would rather like to know the full facts here, but as we don't at this point then I would suggest that it sounds like madness to let planning lapse in this day and age given how difficult it can be to obtain. Think about digging some footings and then selling it on perhaps? You might do some tax planning in that direction and at least move it into trading stock?

The default if you do nothing is that the cost is capital and if you decide to let it lapse there is no asset and you have a capital loss at least.

Virtual tax support for accountants: www.rossmartin.co.uk

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