Capital allowances

Capital allowances

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Company operates 2 public houses and opens a third one shortly after the year end. In the run up to the year end significant amounts are incurred on plant for the new premises but the premises are not actually opened. The expenditure on plant pre year end is definitley unconditional and the plant has been delivered. Can CA's be claimed in the current year even though the assets strictly had not been brought into use at the year end ?
Assistance would be appreciated.
Anon

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Steven Bone
By Steven Bone
24th Sep 2007 09:16

Yes CAs may be claimed
There is no requirement for plant or machinery to be used (as there is for industrial buildings), so it does not matter whether the premises are actually opened. Capital expenditure must simply must be incurred wholly or partly for the purposes of the qualifying activity [, i.e. trade [see CAA 2001 s11(4)(a) and s15(1)(a)].

There is an additional rule in CAA 2001 s12 that ensures where expenditure on P&M is incurred for the purposes of a qualifying activity by a person about to carry it on, it is treated as incurred on the day on which that activity actually commences. However, this should not be relevant in your company's circumstances because it is already trading by operating the two other pubs.

Steven Bone
The Capital Allowances Partnership LLP (www.cap-allow.com)
Co-author of Tottel's Capital Allowances: Transactions & Planning 2007/08 and Tolley's Tax Planning 2007/08

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