Can I claim the following as capital allowances?

Renovation building works for him and his partner to use as business premises

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 My client has paid for a rented outbuilding to be renovated for business premises for both his business and his girlfriend's (separate) business. The owner of the building has contributed 25% of the cost and the girlfriend is paying back by a small contribution to his business each month. The works completed include items which I understand are not capital allowances (new roof joists, new floors, plastering and painting) and some which I think are P&M or integral features (electrical works, lighting, replacement of soil pipe, new water system and insulation). Am I right in how I have attributed these?

Once I have calculated the capital allowances, I am going to use the AIA to offset them against profits. Can I deduct the full amount against his business and how do I treat the repayments from the girlfriend in the next financial year.

All advice appreciated

 

Replies (7)

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By Accountant A
18th Jan 2017 15:53

Complicated enough but then there's the landlord's contribution and the fact that the tenant doesn't own the building.

What is the nature of the two businesses?

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Replying to Accountant A:
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By Portia Nina Levin
18th Jan 2017 16:03

Accountant A wrote:

What is the nature of the two businesses?


Uggghhh! Horrible English. That should be "what are the natures" surely?
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Replying to Portia Nina Levin:
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By Accountant A
18th Jan 2017 16:14

Portia Nina Levin wrote:

Accountant A wrote:

What is the nature of the two businesses?

Uggghhh! Horrible English. That should be "what are the natures" surely?

Fayre comment

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By Jude Edmondson
18th Jan 2017 16:08

Thanks for prompt response.

One business is a counselling service and he has a room for this and the other is a wellbeing practice and she has a treatment room and they have a shared toilet and reception area.

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Replying to Jude Edmondson:
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By Accountant A
18th Jan 2017 16:27

In that case, I would have thought very little of the expenditure will qualify. You probably need to scrutinise the HMRC manual https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca22010 (which may or may not be an objective view of what relief is available).

What is the 25% contribution documented as and how is that being treated?

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By Jude Edmondson
18th Jan 2017 16:39

The 25% was paid directly into my client's account as a one-off payment from the landlord. I was unsure how to treat this. Should I deduct it from the overall capital cost or keep it in and treat is as a liability?

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Replying to Jude Edmondson:
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By Accountant A
18th Jan 2017 16:51

Jude Edmondson wrote:

The 25% was paid directly into my client's account as a one-off payment from the landlord. I was unsure how to treat this. Should I deduct it from the overall capital cost or keep it in and treat is as a liability?

I'm well out of my depth but it looks like a reverse premium.

There have been more recent questions here about reverse premiums/premia but this looks like the last one with an answer.

https://www.accountingweb.co.uk/any-answers/is-there-a-difference-in-the...

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