Heard the one about a farmer, a driveway and capital expenditure? All three featured in an intriguing tax tribunal case which has lessons for all types of business. Nick Huber reports
Giles Mooney and Tim Good from TAXtv discuss the recent case in the September episode of TAXtv.
G Pratt & Sons v HMRC (TCO 1269) centred on the tax treatment of a farmer’s drive which was dug up and resurfaced with new tarmac at a cost of £23,300.
The farmer argued that it was a repair, meaning that it was an ongoing cost and revenue repairs could be claimed immediately.
HMRC argued that the effect of concreting the drive was to provide an entirely new and better surface than before. This work had improved the business and should therefore should be treated as a capital expenditure.