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Is this Capital or Revenue Expenditure

Client Rental property destroyed by cannabis plant

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Client received insurance proceeds for loss of rent and for repairing the property following exposure to a Cannabis Plant

Insurance Proceeds covered the following

1) Repair Walls

2) Redecoration

3) Rubbish Clearance

4) Repair and rebuild Walls

5) Electrical Re-wire

6) New Carpets for upstairs

I assume all the above will be revenue expenditure

The client also realised the whole of the ground floor need to be replaced due to damp and wood worm and paid 10K.  This was not covered by insurance.  This would be capital ?

 

Replies (18)

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By frankfx
24th Dec 2020 11:54

Why do you think it is capital.

There are plenty of cases that could help you frame an informed viewpoint

Share your research.

And highlight the aspects of your clients specific circumstances .

This very point has been dissected on this forum many times.

Indeed in the past week!

Please kindly let us know if you reach your own conclusion

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By Tax Dragon
24th Dec 2020 12:00

Blimey.

Who knew cannabis plants could be so moody? That's some rampage.

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Replying to Tax Dragon:
paddle steamer
By DJKL
27th Dec 2020 16:16

Akin to the one in "Little Shop of Horrors" or from "Day of the Triffids"?

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Replying to DJKL:
Melchett
By thestudyman
27th Dec 2020 21:52

Gives new meaning to the phrase "pot kettle black"

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By the_drookit_dug
24th Dec 2020 12:02

If there's been an element of improvement to the floor such as damp proof coursing where there was none previously, then this may be capital in nature - although possibly just incidental to the repair.

I vote expense.

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RLI
By lionofludesch
24th Dec 2020 13:11

If it's covered by insurance, it's not expenditure at all.

A new floor ? Was there a floor before ? I'm guessing yes. Repairs for me. I can see it being a substantial technical improvemednt on what they had before.

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Replying to lionofludesch:
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By Tax Dragon
24th Dec 2020 15:26

lionofludesch wrote:

If it's covered by insurance, it's not expenditure at all.

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Replying to lionofludesch:
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By sanjay100
24th Dec 2020 15:29

Yes there was a wood flooring and replaced it will similar so thinking it about - it is a repair.

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Replying to lionofludesch:
By SteveHa
25th Dec 2020 21:52

This was my immediate thought.

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By Justin Bryant
24th Dec 2020 14:43

If the property has gone to pot, it's normally capital.

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Replying to Justin Bryant:
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By Tax Dragon
24th Dec 2020 15:17

Some jokes don't need editing. That's very good. (Ever wondered about capitalising on your stand-up? Maybe make some revenue?)

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Replying to Justin Bryant:
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By Tax Dragon
24th Dec 2020 15:29

That's very thoughtful.

Glad you didn't though.

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Replying to Tax Dragon:
JCACE
By jcace
24th Dec 2020 18:32

He'd just end up rehashing old jokes before being put out to grass (I'll get my coat)

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Replying to jcace:
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By I'msorryIhaven'taclue
24th Dec 2020 19:05

Or you could say he wrecked the joint (where's my coat?)

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By Paul Crowley
24th Dec 2020 15:25

There was a floor
There is now just a floor

Repair

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Replying to Paul Crowley:
JCACE
By jcace
24th Dec 2020 18:34

Alternatively, he replaced the whole of the ground floor! (Quite a feat of engineering, especially for just £10K)

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By SteveHa
25th Dec 2020 21:54

Stone me, You may be about to make a hash of this. What kind of joint was it that got ruined?

It's a dooby of a question.

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By Richard Grant
27th Dec 2020 12:35

Was it an exploding cannabis plant?

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