Repairs/Renewals/New Build

Repairs/Renewals/New Build

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I have a new client that has in this current tax year, made several renovations to an existing building; installation of a new office area, toilets, kitchen and windows. This has changed the use of the area from a vehicle conversion station to open plan offices, customer reception and general facilities.

The conversion operation has now been moved into a purpose built steel fabricated "building". All costing in the region of £35k. The land the new building is now on is already owned by the client. The building has no fixed features either internally or externally, it basically looks like a triple garage with roller shutter doors.

My question is how do I treat with regards to tax deductability/AIA/WDA

a) The internal renovations
b) The new building
c) Cost of labour for the works (labour only cost as client purchased all materials)

Thank you
Lisa

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By kenmoody
19th Sep 2008 15:46

And to me ...
... remember also that any repair work which is occasioned as a result of any capital expenditure is also likely to be capital - as in W P Lawrie v CIR. That's the one about a company which replaced its roof and at the same time added another story and wasn't allowed anything. There must be some F&F in there though which would qualify as plant i.e. sanitary goods & kitchen fittings, possibly flloor coverings if not fixed. Possibly creating a reception counter?

I agree its a question of analysing the costs and seeing what can be claimed, however I know that this is not easy when all the analysis says is - bits of wood, screws, etc. Not very helpful. You may have to ask the client to identify what could be regarded as F&F etc for which CAs may be claimed, repairs - if any - which would have been needed anyway - and lastly improvements which don't qualify for CAs. Certainly the new building doesn't sound as if there is any plant in there other than if the roller shutter doors are electrically operated.

You will have to contend with the new rules on integral fittings if any of the expenditure is post 31/3/2008 / 5/4/2008.

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By AnonymousUser
18th Sep 2008 16:15

Analyse it and then...
...look at what is capital, improving, extending etc. Check that the other items can be a repair, i.e. making good. Mostly looks capital to me.

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