Leasehold Improvements - capitalise everything?

We have taken on a sub-lease of a pub and are undetaking refurb works. What to capitalise?

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Hi,

We have taken on a sub-lease of a pub and are undetaking refurb works. My question is, can I capitalise all the spend, even minor charges? For example, if I bought a component for the toilets, I typically would just expense this to repairs and maintenance but as this forms part of the larger project, can I capitalise it and start depreciating it when the whole refurb project is finished? 

Thanks

 

Replies (19)

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By FactChecker
17th Apr 2024 15:48

Just a thought ... this is your 3rd question on one or another aspects of CapEx (and all for the same project) in the last week; do you not think it's time to find an accountant who can answer your questions (knowing all the relevant specifics of the project and people involved)?

They might even be able to suggest ways in which you can save tax (or whatever seems pertinent) *before* it's too late.

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DougScott
By Dougscott
17th Apr 2024 16:51

Blimey, get an accountant quick is my advice!

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Replying to Dougscott:
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By S_123
17th Apr 2024 17:03

Thank you for your completely unhelpful advice. Why would you not just provide some guidance if you know the answer?

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Replying to S_123:
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By Leywood
17th Apr 2024 17:13

Why is 'get an Accountant' unhelpful advice? Two folk have suggested that such a course of action is wise. I would suggest the same.

You clearly need some assistance/are out of your depth.

This isnt a free tax/accountancy helpline.

Nor is it all supposed to be an all take and no give forum.

Tax planning is best done in advance, key is in the word 'planning'.

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Replying to S_123:
DougScott
By Dougscott
17th Apr 2024 20:15

S_123 wrote:

Thank you for your completely unhelpful advice. Why would you not just provide some guidance if you know the answer?

Because I don't/can't give advice without being cognisant of all the facts. And I would have to do my AML checks on you, send you an appointment letter with the note of my fees and get you to sign it. Your question just demonstrates your ignorance so my advice is get or ask your accountant who is appointed by you and aware of all the facts.

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By S_123
17th Apr 2024 17:01

I don't understand what is so shocking about my question - I am simply asking if it is better to expense the smaller purchases or just capitalise them as part of the overall refurb project cost?

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Replying to S_123:
paddle steamer
By DJKL
17th Apr 2024 17:10

Better for what, accounts, tax, bank reports etc, there is no one size?

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Replying to S_123:
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By Paul Crowley
17th Apr 2024 17:29

How is 'better' to be understood without ever such a lot of detail.

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By S_123
17th Apr 2024 17:01

I don't understand what is so shocking about my question - I am simply asking if it is better to expense the smaller purchases or just capitalise them as part of the overall refurb project cost?

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Replying to S_123:
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By Bobbo
17th Apr 2024 17:08

No one could accurately answer that based on the huge volume of facts you have provided.

Perhaps you could explain why you would want to capitalise something which could be expensed as repairs and maintenance?

Is it a case of simplifying the accounting? Is there an assumption that capital allowances can be claimed on all these "smaller purchases" such that due to AIA the tax effect is the same - relief in the full year? Is there a need to make the balance sheet look better by capitalising things that ought not to be?

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Replying to Bobbo:
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By S_123
17th Apr 2024 17:20

Say anything above £350 would typically be capitalised as part of our company depreciation policy, but because this is a leasehold improvements project, would it not make more sense to capitalise items below this amount too as they form part of the larger overall project? I am just trying to understand what the right way to go about this is. So generally I wouldn't capitalise a component but in the context of the refurb project, am I able to? Or shall I just stick to expensing the small stuff and only capitalising the larger items, per our company depreciation policy?

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Replying to S_123:
paddle steamer
By DJKL
17th Apr 2024 17:28

Ask the FD. If he does not know get him to ask the auditors. The fact you already have a policy suggests someone, somewhere, thought about these things, ask them.

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By More unearned luck
17th Apr 2024 17:34

Despite accountancy and tax being discrete disciplines, you may find it useful to read the JD Wetherspoon tax case. Your accountant, when you appoint one could supply you with a copy of the decision.

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Replying to More unearned luck:
paddle steamer
By DJKL
17th Apr 2024 17:47

My favourite pub tax case was the Scottish & Newcastle one all those years ago (sad that it was quite current when I first heard of it in the 80s) though not so sure any is now that applicable within our wonderful new world of CAs etc

https://www.accaglobal.com/gb/en/technical-activities/technical-resource...

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Replying to DJKL:
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By FactChecker
17th Apr 2024 18:16

There's still some useful stuff in there ... although initially I had a problem retaining focus after encountering:
"Wetherspoons also operate a chain of public houses and have a reputation of refurbishing historic property to provide public houses with a special atmosphere"

I guess that's one way of describing my local Wetherspoons ...

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Replying to FactChecker:
boxfile
By spilly
18th Apr 2024 00:01

Maybe the atmosphere only changes to ‘special’ when you grace it with your presence?

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Replying to spilly:
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By FactChecker
18th Apr 2024 00:20

Nobody else has ever noticed my resemblance to Jose Mourinho ... so thanks!

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Replying to FactChecker:
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By More unearned luck
18th Apr 2024 21:08

Doesn't Private Eye have a column Me and My 'Spoons?

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By JCresswellTax
18th Apr 2024 09:56

Yes, you can do as you please.

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