You might also be interested in
Replies (3)
Please login or register to join the discussion.
Come on Chancellor
This is a great example of how tax legislation causes business unnecessary expense and uncertainty, Why can HMRC not simply accept the accounting treatment used. Over a few years it is not going to make any difference to the tax take.
Capital Improvements and Revenue Expenditure
One way to go forward is consider the website being built as would a piece of machinery. All associated costs at the start are capitalised. Improvements during the life of the asset is also capitalised.
Maintenance would be a revenue expenditure. Simon mentioned paying a monthly fee. If he stops paying, they pull the plug. This would be revenue expenditure. I.E. if you have a car ,a photo copier or even a water dispenser unit that you pay a monthly fee for its use. If you stop paying the fee they take the equipment (asset) away, you don't own them!!
The cost of "re-designing" the website, another choice of words may help. Simon, as mentioned at the start of your e-mail " No up front fees or purchase of the actual website". I would class this charge as a consultation fee as at the end of the meeting you will still not own the website.
Monthly fees?
So what is the situation where I pay a third party a monthly fee to maintain my web site and send out weekly e-mails on my behalf? There were no upfront fees for the design and initial set up.
If I stop paying them the fee they will withdraw my web site and I will have nothing - the content is all theirs.
Surely a revenue treatment will be allowed.
However as long as I go on paying them I have an enduring asset which adds value to my practice - this could make it capital. Do I capitalise the monthly payments and then claim capital allowances?
From next year I will not really care as my capital expenditure will be well below £50k and I will be able to claim it all as an annual allowance but I think I should know how to treat it in my accounts. I have about 8 years of expenditure which may need to be changed from revenue to capital!!
What about the meeting I am going to have next month to redesign the site. Do I treat the fees for the redesign as a repair cost (maintenance of an existing asset) or capital.