FHL and new Fire Regulations

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My client has had a FHL in Devon for a number of years.  With the new fire regulations coming into force imminently, she is having to spend circa £2k on upgrading her existing fire prevention & safety equipment.  She has to put in hard wired smoke detectors, some kind of emergency keypad etc.  From what I have read the expenditure can be offset against revenue, would anyone disagree and argue that it's added value to the property and therefore should be classed as a capital expense?

Replies (8)

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By David Ex
29th Jan 2024 18:33

Probably need to know the details but as soon as upgrading is mentioned, the doubts set in. And clearly the spend has added value to the property; though that’s not necessarily inconsistent with revenue treatment.

Where did you read that the costs are revenue for tax purposes?

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By Ashford
29th Jan 2024 18:48

Thank you David Ex for your reply, I read it on Croner i-tax and accounting:
'Most expenditure incurred on fire prevention and safety is deductible as revenue expenditure or under other capital allowances provisions, including expenditure'

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Replying to Ashford:
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By David Ex
29th Jan 2024 19:11

Ashford wrote:

Thank you David Ex for your reply, I read it on Croner i-tax and accounting:
'Most expenditure incurred on fire prevention and safety is deductible as revenue expenditure or under other capital allowances provisions, including expenditure'

Genuinely surprised at the first part of that. I’m certainly not aware of any special rules.

No idea how authoritative these pronouncements are:

https://community.hmrc.gov.uk/customerforums/ifp/2ca7fd2d-e03c-ee11-a81c...

“Simply because an expense is a legal requirement does not necessarily make it an allowable income tax expense.”

I’ll be interested to see what more knowledgeable respondents think.

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By DKB-Sheffield
29th Jan 2024 19:01

Arguably it doesn't 'add value' - as an FHL. If it's a requirement, it would merely prevent a loss in value (of an FHL). However, that is where the Revenue/ Capital debate could drag on. I've not considered the case law/ legislation... just an observation.

From a tax aspect, Fire Alarm Systems are specifically included in List C of s23 (CA 2001), so normal P&M (not IF, or Buildings) should apply. So if it is capital, normal rules should apply.

Is the FHL being reported on cash-basis or accruals? Are we to assume the former... given the question (i.e. bottom line in accruals could have the same outcome)?

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By DougScot
29th Jan 2024 23:53

In my opinion it is fixtures and fittings so you would claim caital allowances as with any other FHL fixture and fitting.

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paddle steamer
By DJKL
30th Jan 2024 09:24

Somewhat off topic but what are these regulations? I presume these are E & W but re property legislation where England goes Scotland follows and vice versa so I would not mind a read as we have one FHL and have been considering creating another flat to use as similar.

The only times I have experienced extensive fire specs was when converting an office stair to be used as FHL where we needed to put in sprinklers etc as part of the planning process, other than that it has been sorting doors/fitting closers/smoke alarms and a fire blanket and that has been pretty much all that has been needed.

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Replying to DJKL:
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By FactChecker
30th Jan 2024 11:25

Good point. Although not part of my responsibilities, I was aware of https://www.legislation.gov.uk/uksi/2022/547/made/data.pdf ... but that is specific to high-rise buildings.
What's the new legislation related to FHLs?

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Replying to FactChecker:
paddle steamer
By DJKL
30th Jan 2024 11:47

I found it was an amendment to the 2005 Regs re E & W, this guidance applies though have not found legislation itself.

https://assets.publishing.service.gov.uk/media/64257cff2fa8480013ec0fec/...

Seems to be one needs to conduct a FRA and take it from there, I have forwarded this to the party who runs our FHL to check if they know if there is anything similar coming in /come in re Scotland, I will also have a word with our fire consultant who does the FRA/testing on our commercial properties, to see what he knows.

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