House in Spain - capital allowances and revenue expenses?

House in Spain - capital allowances and revenue...

Didn't find your answer?

I probably just need another cup of tea but I can't get my head round this one this morning.

A partnership trading in the UK has regular contracts in Spain. Instead of staying in hotels when they go out there, they have bought a property with a mortgage. There is no private use, though the property has been fitted out as a 'residential house' with towels, cutlery, furniture etc.

This is most definitely a business asset, but I can't get my head round what they can claim with regards to the furniture and fixtures, along with all the small 'household' stuff. There is absolutely no question of private use, the only reason they go to Spain is to work, but equally a hairdryer or some scatter cushions are not wholly and exclusively for work purposes. But then you wouldn't disallow the 'nice decoration and comfort' element of a hotel bill...

Any advice and pointers towards relevant chapter and verse would be appreciated. Ta!
Faerie Girl

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By AnonymousUser
24th Jul 2008 18:45

Use of Home?
Andy, thanks for your comments.
I'm not going to dispute your take on it, because my second cup of tea didn't help! However, I'm trying to think of all angles and a counter argument could be:

It's only use of home if it is, in fact, a home.
It's not - it's the equivalent of using a hotel. This is the only reason it's been bought. The only added benefit is that it's a capital investment. The partners are purely business partners, they aren't a husband and wife, so no argument of 'they have a home from home when they're working.'

Apportionment is usually only on the basis of personal use. There is no personal use, just periods of absence which are deemed to be less expensive and more convenient than only using a hotel for the time they are in Spain. They can store their Spanish equipment there when they are in the UK, and save on airline baggage fees by having towels (and possibly clothes) etc already there.

I note the point re the TV etc being for a dwelling house. Would it be different if it was a Ltd Co? No personal use thus no BIK on the employees, yet a full business expense nevertheless?

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By AnonymousUser
25th Jul 2008 15:33

Suits
Thanks for the response Andy.

I take your point re it still being a home. This is beginning to sound a lot like, "But I only bought the suit for wearing at work, and never wear it at any other time," countered by the Malieau (sp?) case answer of "Tough luck, warmth and decency, duality of purpose."

That said I don't think absence counts as private use, though possibly a disallowance or apportionment of towels/crockery/etc is in order.

I shall continue questing....

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By gilderda
25th Jul 2008 10:52

All fair points...

... but when it's in use then surely it's "a home", irrespective of whether it's their main home or they have a home elsewhere? They own it (albeit through the company), they're entirely responsible for the cleaning, repairs and maintenance of it and they have the capacity to change anything they like in it such as the decor or layout. They can use it whenever they like and don't have to worry about it being fully booked on any particular date. All these things distinguish a home from a hotel.

I'm not sure whether the fact they only use it as a home when they need to go to Spain on business (or the lack of a personal relationship) is sufficient to distinguish it on the basis of the facts. Do the periods of absence equate to "personal" (i.e. non-business) use - can not using something be considered usage, or is that just way too abstract for a Friday?

If we were talking about a Limited Company owning the property and allowing employees or officers to use it when in Spain on business then I think the position would be much more straightforward.

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By gilderda
24th Jul 2008 15:44

Use of home as office?

Are the same sort of rules going to apply here, with the potential difference that the costs may have to be further apportioned for the periods when the property is not occupied?

Not sure that the physical location makes a great deal of difference to the interpretation, and the usual capital/revenue rules would apply in my opinion.

No plant and machinery allowances will be available on the big stuff - washers, tvs etc as they're being provided for use in a dwelling house.

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