Whether expenditure on resurfacing a yard was revenue or capital

The taxpayer spent £74 000 resurfacing its lorry park. It had not been resurfaced for some time instead patching up the yard with gravel. It claimed the costs as revenue on the basis the work had restored the surface which had become uneven and unstable. In essence the asset had been returned to its previous standard.

HMRC disallowed the deduction. It said the work was of the scale and importance to be capital expenditure. It gave the taxpayer an ‘enduring advantage’ because there would be no need for repairs for many years. The ‘extent and permanence’ of the work preserved part of the fixed capital of the business that would enable the trade to continue.

In the alternative the works amounted to an improvement of the yard.

The First-tier Tribunal said the work had returned the yard to its previous standard. It had not improved the yard -...