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The taxpayers who were in partnership bought a residential care home. The sellers had previously made a retrospective claim for capital allowances on plant and machinery.
The advisers concerned contacted the taxpayers to ask if they wished to proceed with the claim. The taxpayers confirmed they would.
The partnership return was submitted with a claim for 40% first-year allowances and also for capital allowances on fixtures and fittings as shown in the sale agreement.
HMRC disallowed the claim that would have been submitted by the sellers on the basis they might have previously claimed them.
The taxpayer partnership appealed.
The First-tier Tribunal accepted the partnership had acted in good faith but found it was possible ‘if not highly likely’ that the previous owners would claim the capital allowances in question.
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