Buy to let is getting external refurbished. This tax deductable?

MacMickster

chrismac1 wrote: »

The UK tax code is more than 4 times longer than Germany's. Yes despite unification of East Germany and those monster German words which take up half a page, we've managed to come up with the lengthiest tax code of any major economy. This naturally means that much of the UK tax code is very poorly drafted with lots of scope for arguments and counter-arguments.

Fine. Let me outline the commercial approach to poorly drafted tax laws. As long as there is come sort of argument you can put forward, you are justified in claiming "shades of grey" aspects. You outline this to your client, you also outline the arguments we're going to run if the worst comes to the worst so we're both singing the same tune. The ball is then firmly in HMRC's Court to pick out that tax return as one of their 3% that tax year for the enquiry.

The alternative is to simply not claim anything that is a "shade of grey". When you dsicuss the "shades of grey" with clients, 95% plus of the time they want to go for it. That's because they are generally running small businesses which get no favours from the banks, local authorities and least of all HMRC.

No. The alternative is to try to get it right, considering case law in addition to the legislation. If you advise your clients. There is a wide number of reported tax cases which throw light on the shades of grey to help you to distinguish between capital and revenue expenditure. I don't see that trying to put one over on the taxman because they are not going to enquire into every dubious return is actually doing your clients any favours in the long run. Have some ethics.

chrismac1

Which is exactly what I am doing. The tax cases are often mutually conflicting, just consider the "permanent place of work cases" in 2011 alone, which in another thread you'll see have driven a coach and horses through what appeared to be a pretty concrete position HMRC were taking, and which is still their stated position on the website despite these lost cases. Or IR35 which is quite simply a concoction of numerous shades of grey - Canada, USA and Germany all looked at putting in their own versions of IR35 and decided not to because they could see how daft it was, that the resources needed to bring in the tax would be a lot less than the tax. HMRC publishes no figures on this - indeed does not even bother to record them - so no-one can say whether or not IR35 has made any money for the taxpayer.

At least on Capital Allowances the Integral Features Budget changes have taken a lot of shades of grey out of the equation. Why can more laws not be drafted like this?

Pennywise

MacMickster wrote: »

No. The alternative is to try to get it right, considering case law in addition to the legislation. If you advise your clients. There is a wide number of reported tax cases which throw light on the shades of grey to help you to distinguish between capital and revenue expenditure. I don't see that trying to put one over on the taxman because they are not going to enquire into every dubious return is actually doing your clients any favours in the long run. Have some ethics.

And case law will tell you that general building renovations, i.e. re-roofing, soffit replacement, etc is allowable. The OP is talking about basic routine maintenace. OK, it may "improve" the property, but so does replacing rotten windows. The fact is that nothing is being added to the building and that's why it's an allowable expense.

Lets look at other examples:-

Replacement kitchen - allowable if it is a like-for-like replacement, not allowable if all you had before was a free standing cooker and a free standing sideboard style unit & sink, but installing a state of the end integrated/fitted kitchen.

Replacement heating - allowing if you replace raditators and boilers, but not allowable if you're replacing a single gas fire in the lounge and storage heater in the bedroom.

If nothing has been added to the building, and most of the work is simply repairs, replacements etc to what's already there, then there is no doubt, it's allowable as an expense. It doesn't matter whether it was necessary or not - there's no requirement in the legislation for the necessity or reasoning. It barely even comes into shades of grey. An accountant would most likely be negligent if he didn't claim it on the tax return as an expense.

cinderfella

OP the consensus is claim it all. Most accountants (qualified) would although the last guy I worked for used to roll over on his back for the R & C - not a beneficial approach for his clients. He also used to split sch D profits equally between partners which I regarded as negligence unless there was a rigid profit sharing agreement in place. I made my feelings known in the end & told the bosses tax manager to go & learn Sch D rules because I found it ridiculous that the staff when they left believed that sch D profits always had to be split equally. Anyway thats beside the point, but it does give you some idea how incompetent some qualified firms & individuals are in the accountancy profession.

If the premises were commercial the R & C will allow regeneration payments in full.