Many thanks in advance for reading my essay! I have done quite a lot of research and still am not 100% sure of the answer so I'd appreciate any advice you can offer.
My clients set up a limited company with the intention of setting up a tennis club. The company leases land from a sports club. Over the past year, they have built some astroturf 'padel' tennis courts (not quite the same as normal tennis courts as they have glass and steel walls, possibly this is relevant). The tennis club is now up and running and receiving income from members using the courts.
I'm in the process of preparing the year end accounts and corporation tax return and have come to the question of how to treat the expenditure incurred on building the courts (from a tax perspective, accounting perspective is more straight forward).
I have read a lot of the various pages within CA20000 (Plant and machinery allowances) as well as the structures & building allowance stuff. My question is - should this expenditure be treated as plant, or as a structure. It seems as if different bits of the guidance point me in different directions.
The SBA guidance would suggest I could treat it as a structure, and I think it would qualify for the SBA.
''You should treat something as a structure if it has been erected or constructed and is distinct from the earth surrounding it.
Examples of structures include (but are not limited to):...hard tennis courts. ''
Fine, but I also think it might qualify as plant, which would clearly be preferable. There is even a particular piece of guidance about artificial playing surfaces, but I read this and was no clearer really. The tennis court is obviously a setting, but in my opinion, also the apparatus by which the trade is carried out, and is the means of generating profit. So I'm leaning towards treating the costs as plant. Could I please have your opinions and/or previous experience?
For more detail, the construction costs are broken down as follows. I realise that some of these eg the gates and the road, are likely to be specifically excluded from being plant and therefore would have to be structure. I'm hoping the first four costs in particular, are what I could include as plant and maybe the lighting along the access road.
|Construction Works totals £38,514 – this is the creation of the foundations to hold the Padel courts in place. The surface was also levelled.|
|Padel Courts cost totals £ 55,182 – these are the glass and steel Padel courts themselves (around the 'walls' of the court)|
|12mm Glass £2310 – this is an extra thick glass for safety (around the 'walls')|
|Blue Monofilament Turf - £840 – this is the ‘astroturf’ playing surface.|
|3m x 2m Spare Glass lx 2m x 2x Spare Glass Fencing £840 – spare glass panel in case of breakage.|
|2Nr Clubspark Gates Entrance -£11,900 – this is the Access control gate system that allows people to book a court online and then enter an access code to get to the court. It means you do not need to have staff on site to take money for the courts and it also secures the site/ courts.|
|Access Paths Upgrade Road and Carpark - £6,600 to create a new type 1 road and parking area. To get from the car park/ entrance to the courts we layed an asphalt pathway - £2749|
|Lighting and access control gates – £3337 this is a separate security gate lock on the perimeter of the site. Also lighting all along the new road and car park.|
Final thought - the company is loss making this year. I haven't really had time to think this through yet but just adding it quickly as I've run out of time. If any of the above is plant, would you claim the super deduction?
Thnak you very much for reading.