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Book-keeping for commercial property rennovation

How to record capital expenses.

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I have recently bought a commercial property in TS1, through my limited company. It has been empty for five years but previously used as retail/A1.  I have leased the property to a second limited company I own for use as a cafe/A3.  The cafe company is doing the conversion and total rennovation.

I have read elswhere that the costs associated with this rennovation should be booked as capital expenses, and that there is an allowance for these - and in particular for rennovation of commerical property in 'deprived' areas, but I am confused as to how I do the book-keeping. 

For example, if I buy a £500 boiler and have a receipt for it, it is clear this is a capital expense that I can book in Freeagent (the book-keeping software I am using) as having an x-year 'life'.  However, if I also have another receipt showing £200 of 'bits' from Screwfix, such as screws, glue, spanners etc. that I will use to fit or carry-out the work, what should I book this as?  

 

 

 

 

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23rd Jul 2019 08:26

These are questions best asked of the accountant you will be asking to prepare accounts from your bookkeeping at the end of the year.

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By 356B
23rd Jul 2019 12:22

The usual rules relating to Capital and Revenue items apply. I suggest Book-keeping 101 as a starter.

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By DJKL
23rd Jul 2019 13:36

The seek an accountant advice already given is in this scenario a must.

In addition to mere record keeping issues there are possible general vat issues and possible lease premium issues due to the lease between landlord and tenant and the works here being undertaken by the tenant.

It is possibly a scenario where you will blunder into tax implications inadvertently through not appreciating these issues may even possibly exist, early consultation with an accountant is accordingly recommended before you dig too deep a hole.

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to DJKL
23rd Jul 2019 22:58

Thanks for the reply and pointing out the additional potential issues.

I do have an accountant for the company that holds the property and I previously asked him by email which company should do the renovations. His response was "the one that makes the profit". He didn't really elaborate...

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to goatFarmGuru
24th Jul 2019 09:05

Time to find a new accountant, then, I would suggest.

One that can deal with both the questions that you've asked of him and those that you haven't.

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