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Our limited company client runs a motor salvage business and has traded for many years from the same site, broadly divided into five areas, mainly tarmac but with one area being impermeable concrete. One area had a significantly lower grade surface than the other four. The whole site was cracking and subsiding and between 2003 and 2005 was resurfaced with concrete at a cost of £140,000 to comply with new environmental regulations. But before the last area was finished, the first was beginning to break up within less than two years.
Our limited company client runs a motor salvage business and has traded for many years from the same site broadly divided into five areas mainly tarmac but with one area being impermeable concrete. One area had a significantly lower grade surface than the other four. The whole site was cracking and subsiding and between 2003 and 2005 was resurfaced with concrete at a cost of £140 000 to comply with new environmental regulations. But before the last area was finished the first was beginning to break up within less than two years.
The accounts charged the entire resurfacing cost to repairs and renewals. In the corporation tax computation we added back 20% as being the level of capital improvement claiming the remaining 80% as a revenue deduction.
HMRC want the entire expenditure classified as capital and disallowed there being no capital allowances available...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
