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Capital allowances - Cafe

Capital allowances - Cafe

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My client refitted a café.  The premises are leased from the council for 3 years. She spent £5k.  This was on kitchen units, work top, sink, plumbing and waste etc.

Will these be ok for AIA?

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By palcouk
05th Oct 2014 08:54

Cafe

Would seem OK for AIA, although if the Client was already trading in that Cafe there might be an argument for showing some of the expenditure as repairs & renewals

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RLI
By lionofludesch
05th Oct 2014 12:59

Claim

I'd claim that - either as repairs or Capital Allowances.  You just have to take a view on which.

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By cwca
05th Oct 2014 14:39

Allowance

Assess split between elements of repair or improvement.

If essentially removing old units and replacing with new and potentially improved, then tend towards capital and AIA. Perhaps as a result of health and safety requirements requiring higher standard of facilities, again suggesting improvements and AIA?

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By thomas
06th Oct 2014 14:13

The refurb was done prior to her opening the café. I had wondered if any of it was more building type work as its not as though she can take it with her easily when the lease runs out.

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RLI
By lionofludesch
06th Oct 2014 15:20

Capital

Sounds like most of it will be capital but you'd need to look at it task by task.

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By plummy1
06th Oct 2014 23:37

Capital

From the sounds of it most of this would be capital. It's a bit of a generalisation but if the work doesn't include the walls, roof, ceiling, floor, windows or doors then it is likely to be capital in nature. I am assuming here that the Council has not made any rental reduction because the work needed to be undertaken?  

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By thomas
07th Oct 2014 16:43

It was rent free for first six months as it had been empty for a while.

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Replying to johnhemming:
By plummy1
08th Oct 2014 17:00

Probably not an Issue

Hi,

As long as the understanding is that the reduction in rent is just an incentive to let the property and not the council making a contribution to the cost of the refurbishment work HMRC shouldn't be able to question the claiming of capital allowances. Given the  level of spend I don't think HMRC will be that concerned.

Regards

John.

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RLI
By lionofludesch
08th Oct 2014 15:12

Not sure why that's relevant.

If the payments were for fixtures/repairs, they're not rent.

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