Swimming pool business asset

Swimming pool business asset

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I have a ltd company client that wants to install a swimming pool in their garden/garage for coaching lessons. It will be an 'endless pool' which is a very small pool with a wave machine and cameras for training purposes. The client is a registered swimming coach. The pool will be incorporated into the garage which will need to be extended into the garden to fit the pool, a shower and a desk. If they move home, they intend to remove the pool etc. and return the garage it to it's former state.

My initial thoughts were...

Pool - regarded as plant & equipment (s23 CAA 2001), so AIA can be claimed. No issue if property ever sold as it will be removed.

Building work to extend garage - CA not claimable, apart from some integral features.

Business rates - may be payable, will speak to valuations office.

Are my initial thoughts correct and what have I forgotten!

Replies (5)

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By Steve Kesby
24th Jun 2015 11:45

Denny

Before you go claiming CAs, you need to remember that it is the director's house/land (presumably) and the company is incurring the expenditure on the swimming pool.

That means that any claim to CAs relies on the fixtures rules that requires that the company have an interest in the land. That interest might only be a licence to occupy (which includes a tenancy at will).

If you plan on only granting the company a tenancy at will though, the Foxcote Court issue in the case of Denny should be considered.

Denny was decided by Charles Hellier who is usually spot on with things. I do personally disagree with the Denny decision in relation to the Foxcote Court issue, as no consideration was given to a proper apportionment between purposes under ITEPA 2003, s 204 (formerly s 156(2)), other than in relation to apportionment between the directors. A deduction under s 365 (formerly s 156(8)) was also not considered.

Whatever the terms of the the company's lease/licence over the land it should expressly require that the land be returned to its former state on the termination of the lease/licence, to have a chance at not falling at the same hurdle as Denny.

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By User deleted
24th Jun 2015 12:12

Subject to ...

... consideration of Steve's points, would allowances not be available on the garage extension, being alteration of land to accommodate qualifying plant?

And - are the fixtures rules actually in point? A swimming pool is essentially a structure in its own right, but s23 says that it is treated as plant instead. I don't think that necessarily makes it a fixture. Where an asset falls to be treated both as an integral feature and an item on List C, the latter takes precedence. But that is more relevant to the rate of WDAs and I'm not sure that it over-rides the more general treatment of fixtures.

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By Steve Kesby
24th Jun 2015 12:06

That's a possibility BKD

Although, the alteration must be for the purpose only of installing plant and machinery.

Arguably the purposes of the garage extension is to provide a permanent cover for the swimming pool, as was recently considered (albeit in a different context, and focusing more on the issue of apportionment) in Bowerswood House.

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By User deleted
24th Jun 2015 12:25

Depends on the facts, Steve

I read the post as meaning that the existing garage was not large enough to accommodate the pool and so had to be extended. The fact that this would, with the existing building, provide cover is an incidental effect of the expenditure - and doesn't change the purpose of the extension.

However, if the garage had been extended such that only the extension was used to house the pool I'd agree that the analysis may be different. (Though looking at the Judge's words in the above case I'm far from convinced that HMRC would agree to allowances in either event.)
 

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By ptax
25th Jun 2015 08:42

Many thanks Steve and BKD

It somehow slipped my mind to think of who actually owned the land!! I will advise the client to arrange for an agreement for the company to occupy the land.

BKD, you correctly understood my meaning that the existing garage was not large enough to accommodate the pool, so it has to be extended. To be precise, around half the pool will be under the garage and half will be in the extension.

Apologies for the delay in replying to your posts, I used to receive emails from AWeb advising me when a post had been responded to, but this seems to have stopped!

 

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