If I go out to staples (or wherever) and spend £200 on a 6ft high 3 foot wide filing cabinet to put client records in, it is a filing cabinet and it will qualify for tax relief
If I instead went to the shed shop and purchased a 6ft by 4ft shed for £300, brought it home, put in a wall of racking, and erected it next to my office to store clients books in (I have one client who annually delivers 15+boxes of books - v old fashioned!!) and said shed was used purely as a filing cabinet (of sorts) then it would not qualify.
Seems a tad unfair to me
Thoughts ?
Replies (27)
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Absolutely agree
Wearing a different hat we have a small farm. Our storeroom has been repeatedly broken into over the years including twice this year. On the penultimate occasion the thieves took several thousand pounds worth of equipment including a nearly new diesel generator (6Kva), sheep shearing machine, electric fence units, pressure washer, lots of fencing tools etc.etc..
What I really need is a good secure safe. The ideal model to accomodate all the valuables would about 9ft by 9ft and 10ft long. Unfortunately it will not fit through the doors of the storeroom and if I leave it outside I understand I cannot claim CAs as it will have magically turned into a storage container and be classed as a building.
Do you think that if I built a shed around it so that the container were indoors, it could then be classed as a safe?
Some years ago a client which was involved in sound and light shows including lasers and fireworks had done one event where they used two sheds of the same size as your 'filing cabinet'. For this particular job the sheds were situated on scaffolding structures to provide a dry environment for the control of all the lighting and effects which involved an element of computer control and give the operators a view over the site. At the end of the event the sheds were dismantled and taken off site and subsequently used at other events.
At this remove I cannot remember whether I capitalised the sheds or wrote them off to cost of sales as the directors did not imagine they would survive many cycles of assembly/re-assembly. In either case the cost of two cheap sheds would have been fairly insignificant but I had no doubts that they were as much an allowable expense as the scaffoding (hired) that they sat upon.
Perhaps if you sited your 'filing cabinet' over a manhole cover or at a place where for some other reason it would be essential to move it in certain circumstances?
With regard to my 'safe', my tractor/loader would have the lifting capacity to move it if empty. Perhaps I should keep a series of photographs on file with it in different positions.
Arguable
It seems to me that there is a possible argument for tax relief for your shed.
It is clearly capital expenditure, so the question is whether it qualifies for plant and machinery allowances.
I don't think it can be described as a building, at least if you are sticking it inside your office/home. (My understanding is that you are envisaging it sitting inside the building, rather than next to your office but out of doors?)
Arguably, it is a "structure" which will be problematic. However, a "structure" is defined (at CAA 2001, s. 22) to mean a "fixed structure" (other than a building). I am not sure that the courts would describe a shed inside a large room as a "fixed structure". It depends in part on how you are putting it up.
If you win on that point, you are outside the statutory restrictions and it comes down to case law principles. On those principles, you need to consider the function of the item in the business. If you have a shed within a building, and it is clearly being used for storage, I think there is a pretty good argument that it is plant. I would argue that it is an asset with which, rather than within which, you are carrying on your business.
I suspect that HMRC would disagree, but then they would need to say why. I don't really buy their view (at CA 22110) that "the fixed chicken cages inside a poultry house should not be accepted as plant". In front of a tribunal, I think you would have a fighting chance.
As the judge in the Cole Bros case famously stated:
"[Inspectors of Taxes] may be pardoned for finding anything, or almost anything, to be or not to be plant and may be justified in making any number, or almost any number, of inconsistent concessions and illogical distinctions. It all depends on the circumstances, especially the work of the particular taxpayer, and (I feel bound to add) on how it strikes the particular judges of the question, whether in tax administration or on the judicial bench."
In other words, don't necessarily take HMRC guidance at face value on what constitutes plant, as long as you can address the statutory restrictions.
Ray
Outdoor shed
I don't think it can be described as a building, at least if you are sticking it inside your office/home. (My understanding is that you are envisaging it sitting inside the building, rather than next to your office but out of doors?)
Although I am not familiar with Ding Dong's domestic situation, I would have thought that the shed must be outside his house. If he had room in his house, he could simply "put in a wall of racking" indoors, rather than buy a shed.
In my opinion, it is capital expenditure, on which no capital allowances can be claimed.
Inside or out
Euan
You may well be right about the location of the shed - perhaps we will be enlightened by DD. Although it seems odd, I understood the intention might be to have it indoors as (a) the alternative was to be a filing cabinet (which would presumably have been indoors and was to be of a not very different size) and (b) the shed was to be erected "next to my office". But yes, I may have mis-read the intention.
If it is outdoors, then I think it is much more problematic to claim as plant as it will then be primarily protection from the elements and so on - the building within which the business is carried on, rather than apparatus with which.
Ray
When it's moved
I thought the tipping point was that it does have to be physically moved
ie a temporary structure
So ...
... if it is outside, I agree with Euan that allowances will not be due. Sorry that I did misunderstand what you were saying. And yes, it may seem unfair but - as has been said - there is no equity in taxation.
Re B Adder: yes, but in principle that point relates specifically to buildings (as opposed to structures) where there is an exemption from the statutory restrictions for "moveable buildings intended to be moved in the course of the qualifying activity" (item 21 in List C at s. 23). If the shed is a structure rather than a building, the test would not specifically apply.
Would a plastic rather than wooden
shed be better (I know you can get those small plastic storage devices for your bike/bins etc)...which appear to be very temporary in that they are probably easy to move around. Of course if you sell your house and take the shed with you then it must be seen as temporary....surely?
@ Ray
Doesn't the structure exclusion apply to fixed structures, such that if Ding Dong actually moves his filing shed from time to time, then either:
it's a moveable building, orit's just a temporary structure.
Fixed structures
Steve
Yes, the statutory restriction is for buildings or for fixed structures (as confirmed in my first comment above). So it is outside the statutory restriction if it is not a fixed structure. It is also outside the statutory restriction if it is a building that is "intended to be moved in the course of the qualifying activity" (like a builder's hut). The mere fact that a building is moveable is not enough in itself.
But if it is not barred by the statutory restrictions in sections 21 and 22 (for buildings and structures) that does not get the issue home and dry. It is then necessary to consider it on case law principles. On those first principles from case law, I think it is very unlikely that it would be accepted (on the facts as they have now been clarified) as plant. It will be part of the premises in which the business is carried on - not fundamentally different from the outside office itself.
Ray
Or even ...
... a van, a lwb Merc would do the job, work station at one end, filing the other end. A true mobile office, you would never again leave the file in the office when visiting a client, and you could claim the input VAT back (assuming you're registered!).
Not sure about running costs, I know you can claim office to client mileage, but that's taking it literally!
Depends ...
PS - @ OGA - not a bad idea - but I wonder if I instead opted for @ motorhome I might be a bit more comfotable !!
If you operate through a limited company that could be a taxable bik, there was a post on here about same in the last few days.
However, if you bought an old coach or bus and converted it, well ...
tree house gets round the problem
Surely a tree house neatly skirts the problem ...it's moving most of the time ("wind on branch" effect), is used exclusively for the biz in the course of the biz (must keep them damn birds off it! .... and out of it!), and could be rather fetching to look at from the typical accoutant's dreary scrimped office space.
How about
buying the shed ( a temporary structure per the Local Authority) in your personal capacity and renting it to the business.
Wow!
You guys crack me up!
£300? Less than the price of a set of ink cartridges for the laser printer, which last about a month.
I would write the shed off to Miscellaneous Petty Cash, or if the auditors demanded more detail, to Minor Office Items.
£300!! Better have a special depreciation policy for that.....
Buy a Cattle Trailer
A couple of years ago, when I was decorating and sorting out my "home office" (what was formerly the calving shed), I borrowed an Ifor Williams cattle trailer from a client (brand new so not full of s**t). It worked really well because is was totally dry, and had adjustable shelves/floors inside which could be adapted to store different types of boxes, furniture, etc. Even had lights inside. Totally moveable so would be plant.
Shed Capital Expenditure
We take the common sense view every time - is it capital/for business/can you move it if necessary - yes every time -claim capital allowances. Let's face it, you're talking peanuts...man up and stop agonising!