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A new company has constructed and installed a wind turbine for a considerable sum on land that is rented from a farmer for a share of profits
A new client has a company that runs a single wind turbine to generate and sell electricity and to receive the feed-in tariff. The turbine cost £500 000 and the ancillary set-up costs – for example the grid connection land work connections legal fees etc – were about £200 000. The site was leased from a farmer who will receive a rent tied to the income generated over 20 years.
At the date of writing no income has been generated.
The turbine has just been sold to and leased back from a third party for £400 000. Advice is sought on how to treat the costs (a) in the accounts and (b) for capital allowances.
We could net the sale proceeds against total costs with a loss on sale of £300 000 or show a loss on sale of £100 000 and have a leasehold asset...
