Can I capitalise legal costs on asset improvement

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If a tenant is refusing to allow access for capital improvements/replacements, can legal costs to enforce access be capitalised as part of expenditure required to improve the asset or not ? Thanks

Replies (6)

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By Anonymous Accountant
23rd Sep 2022 16:34

Do you mean can you capitalise the asset in the accounts or do you mean can you claim capital allowances? Either way I think this is a question for your accountant.

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By Paul Crowley
23rd Sep 2022 18:15

Why do you want to?

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paddle steamer
23rd Sep 2022 19:00

Surely one might argue these are costs relating to the implementation of the terms of the lease (right of access) and accordingly is there a case they are possibly revenue expenditure?

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By Tax Dragon
24th Sep 2022 06:35

Generally (for tax purposes anyway - I yield to previous respondents re accounts treatment) fees are capital if they relate to a capital matter.

Btw I don't see the relevance of any of your selected tags.

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By thestudyman
24th Sep 2022 11:06

In reality if its a residential contract such as an AST, a tenant could continue to refuse access, and no amount of legal action or otherwise can change this - unless it gets to a much further stage of repossession, which is only enforced by the Courts.

I believe the legal costs is not directly connected to the capital repair - its main purpose is to enforce or gain entry, which would be classed as revenue expenditure.

So I would say, the cost goes into P&L.

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By Tax Dragon
24th Sep 2022 14:05

The corollary/counterpoint to/better way of making my earlier point is that generally fees are revenue unless they relate to a capital matter, in which case they themselves are likely capital.

Costs of defending the title to a property, for example, are capital.

(OP I'm not commenting on your case. Who am I to advise you? How would you know? I'm simply commenting. It's a free for all forum, this.)

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