Building work associated with leasehold premises
My clients have incorporated their business and shortly after, purchased the freehold which they had previosuly rented. The property comprises two shops and a dwelling, on one site. It has been purchased privately by the directors and one shop is rented to the company.
Some improvements are being made - a new shop is being constructed to replace that currently being let to the company and when it is finished the original building will be knocked down. This will improve the layout of the site so that the shop and the dwelling will each have their own driveway.
Having started the accounts I was dismayed to see that the client has been putting the redevelopment costs through the business. Although they can recover the VAT if the company is invoiced, it appears to me that there would be no tax relief on the work at any point unless the owners of the freehold bear the costs in which case they would get tax relief when the property is sold. It also seems to me that the value of the dwelling will be improved by the work done, in which case not all the improvements could be considered relevant to the company anyway.
I feel that the redevelopment costs should be borne by the freehold owners and the directors current account should be adjusted accordingly for costs paid so far. The VAT claimed to date should be repaid.
I would be grateful for anyone's thoughts on this as working in isolation you have to argue every case with yourself!
- Hosted email exchange 57 2
- Why will HMRC not code out my client's £1,730 underpayment for 12/13 327 11
- Scottish independence - what happens to HMRC? 719 45
- Bringing money to Uk 173 3
- How can I tell what returns are outstanding on HMRC online? 53 1
- G P life time allowance 64 2
- Accounting for investment club gains 90 2
- Audit rules 98 2
- New Business Registration 162 3
- Moving from Sage payroll to Iris Payroll 165 5
- Incorporation Fee - What's Non-deductible? 537 11
- SA302 92 2
- Can customer claim VAT on contractor cash purchases. 128 1
- Can anyone advise on the best VAT Scheme to change to? 90 2
- VAT REGISTRATION TRANSFER 56 2
- How long are you on hold- IRIS Payroll 173 6
- How will auto enrolment affect accountants? 1,267 38
- Childcare vouchers and final month payroll Qs 63 1
- Capital allowances for estates in administration 101 1
- Hotel accommodation tax deductible? 273 3
- Xtuple 487
- Qtac payroll for bureau 328
- Confused - Professional Association a Mutual trader, or not? 273
- Industrial & Provident Societies 267
- Data transfer from Sage Line 50 to VT Transaction+ 211
- Mehjoo 209
- New strategic report 165
- Domain name sale and limited company 148
- Are HMRC cutting out Agents in tax investigations? 145
- South African Government Pension 144