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Cladding/fire safety work

Capital or revenue

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Are costs incurred in replacing unsafe cladding in a buy to let apartment treated as capital or revenue ?

My instinct tells me it's a repair and renewal, but as it would add substantially to the market value of a property could the revenue argue it capital ?

 

Thanks

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By Wanderer
06th Apr 2021 16:34

anonymous wrote:
Cladding/fire safety work
Capital or revenue

Are costs incurred in replacing unsafe cladding in a buy to let apartment treated as capital or revenue ?

My instinct tells me it's a repair and renewal, but as it would add substantially to the market value of a property could the revenue argue it capital ?

Thanks

Why have you abused the anonymous option?
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Replying to Wanderer:
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By aj.adams
07th Apr 2021 10:54

They should have used a generic anonymous name instead I suppose

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Replying to aj.adams:
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By Tax Dragon
08th Apr 2021 11:22

Yes. That's the point. Pseudonymous is not the same as anonymous. You know I am Tax Dragon. Wanderer is Wanderer. Etc. A name is a name even if it's not 'real'.

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Replying to Tax Dragon:
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By Paul Crowley
08th Apr 2021 12:09

And then responders can see prior questions so better able to assist

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paddle steamer
By DJKL
06th Apr 2021 16:41

Depends- how recently was the property purchased, was defective cladding reflected within the price the purchaser paid?

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By PandoraSleeps
06th Apr 2021 17:48

Most probably capital as costs incurred to bring the asset into a lettable condition.

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Replying to PandoraSleeps:
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By The Dullard
07th Apr 2021 15:15

Citation please?

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By The Dullard
07th Apr 2021 15:15

In my view it is tenable to claim the expense as a revenue expense. Could HMRC argue that it's capital? Yes they could. When and if they do, you can concede on the basis that you don't agree, but it isn't worth the costs of taking it to tribunal, or you could take it to tribunal if it is worth it.

DJKL alludes to Law Shipping. The converse case is, of course, Odeon Associated Theatres, and this little b**stard sits on the fence between them.

I've had a house for a number of years. Due to deterioration I need to replace the ceilings throughout. It was built in the 1970s and the ceilings are all covered in Artex containing Asbestos. The price was not depressed in any way to reflect this. Now I have to bring in the Asbestos people to remove it, which costs a small fortune. Nonetheless, I regard that as a revenue expense.

I bought a house last year and I have just discovered that there is a Japanese Knotweed infestation in the garden. There was no adjustment to the purchase price for this. I didn't know about it. I'm going to have to pay another bunch of c***s a small fortune to remove it. My solicitors may or may not be successful in recovering some of that small fortune from my seller and/or professionals acting. I regard the costs of removal as a revenue expense.

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Replying to The Dullard:
paddle steamer
By DJKL
08th Apr 2021 11:43

Given I only in total recall bits from circa four tax cases I do need my opportunity to use them when I can. (Law/Odeon/Ayrshire/Ramsay).I need a meaningful tax case with a D, I could then spell Roald and then nearly double my tax knowledge adding a further L,A,D.H.

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By Paul Crowley
07th Apr 2021 15:21

How long owned?
Was it deemed to be a blighted property when bought?

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By Tax Dragon
08th Apr 2021 11:25

As DJKL says, it depends. More info needed.

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