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I really feel I should know this but....?

Consultants fees for grant application for plant & machinery tax allowable in P&L?

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Client has incurred consultancy fees for assistance with a grant application for plant & machinery (not an insignificant amount-consutancy fee and grant). He was successful in the application and has received the grant. There was no grant received for the consultancy part can I claim the fee in the P&L and obtain tax relief even though the grant is for capital expenditure?

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RLI
By lionofludesch
10th Jul 2020 14:40

I vote yes.

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By Wanderer
10th Jul 2020 14:52

Yep.
Akin to incidental cost of raising finance.
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45815

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Replying to Wanderer:
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By Di
10th Jul 2020 15:17

Thanks but if you read re expense incurred acquiring a capital asset then its not allowed? I think that's where I am getting confused.

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Replying to Di:
Stepurhan
By stepurhan
10th Jul 2020 15:20

It's not a cost incurred in acquiring a capital asset.

It's a cost incurred in obtaining a grant, which subsequently allows you to acquire a capital asset.

Obtaining the grant and buying the asset are two separate things, even though the grant was for the purpose of buying the asset.

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Replying to stepurhan:
RLI
By lionofludesch
10th Jul 2020 15:30

stepurhan wrote:

It's a cost incurred in obtaining a grant.....

Exactly.

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Psycho
By Wilson Philips
10th Jul 2020 15:36

Merely to play Devil’s Advocate - I don’t disagree with the previous respondents re cost of raising finance - is there an argument that:

Capital grants are usually set against the cost of the asset for tax purposes. Should the fees therefore be set against the amount of grant being set against the asset cost? Or, if material, capitalised and released to P&L as the grant is released (if it is in fact so released). Ultimately, you arrive back at the same position - sooner if the asset qualifies for AIA.

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Replying to Wilson Philips:
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By Tax Dragon
10th Jul 2020 15:42

You beat me to it but yes, I think relief [if any] is via the CA system.

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By Tax Dragon
10th Jul 2020 15:40

I hate to go against the flow, but I think you are all suggesting that the cost is allowable on first principles. If so, why do we need s58 (as pointed to by Wanderer)? Wouldn't those costs be allowable on first principles too?

Sadly, the costs in the OP's case don't come within s58.

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By Tax Dragon
10th Jul 2020 15:47

PS I don't see any reason you should know the answer. In fact, relying on old knowledge would be a much more heinous error.

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