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New lease and build costs - check treatment

Please could someone confirm

Hi all,

I would just like to check my understanding on this. Limited company has entered into a new lease for a premises and has bought a franchise.

1) Legal fees on the lease - I believe these should be capitalised under land and buildings but no corporation tax relief given as it is a new lease over 12 months. Or is it possible to allocate it to professional fees (disallowed) I would assume not.

2) As part of the franchise, the company has paid the franchisor to "convert the building for its intended purpose". On this I have requested a detailed breakdown so that I can split between revenue and capital items and on the capital items so that I can identify what qualifies for AIA and what does not including any improvements to the property i.e new partition walls etc.  I have just reviewed the accounts of another company within the same franchise and their accountant has given AIA to everything including the franchise fee and the "conversion of building for intended use" - surely that is not correct?

many thanks


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