New personal client being investigated by HMRC for failure to disclose two residential lettings. I am currently preparing the income & expenditure accounts for the last 4 years for HMRC to scrutinise. Client has personally done plenty of repair work himself during the duration of the lettings (saving himself a small fortune in repair costs) and has passed the following through his books (most expenses are each less than £15):
Angle grinder (£20)
Circular saw (£30)
Drill bits (5 separate purchases of low value)
Drill hole gauge
Filling knife & wood scraper
Impact driver (£30)
Kneeling mat (for low/floor repair work)
Ladder for painting (£30)
Paint brush & pole (£10)
Paint edging roller (£15)
Radiator bleeding key
Protective gloves for metal paint
Screw organiser (£20)
Tape measure (£10)
Wrecking bar for carpet etc. removal
External solar lights & replacement solar lights
I am tempted to disallow most of the above expenses apart from paint brushes, protective gloves and solar lights. However, the reality is that client would have paid lots more repair costs had he got a tradesman in to do the work.
It all seems unfair, but the new Replacement Domestic Items Relief seems to hammer the "Small Tools" allowance on the head.
I suspect client may be retaining most of the small tools for future work, but I need to ask him first.
Does anyone have any alternative views on this matter. Is there an element of subjectivity about all of this, or is it all a black and white issue.
Remember that HMRC will end up with full details of all client's expenses in this particular case!