Capital Allowance on Security Fencing

[JamieAllen]

Hi

Is it possible to claim the costs of erecting perimeter fencing and also hardstanding for a large van? It's a van which has hydraullic equipment etc fitted in it so it need a good hard surface underneath! I don't expect to claim all of the cost but if I could claim some it would help. I wouldn't have had the drive done if it wasn't for the vehicle.

Cheers
Jamie

 

[Williams lester]

Is this at your home or at your place of work?

 

[JamieAllen]

It's at home - I'm a sole trader.

 

[Tom Egerton]

My instincts are that neither are allowable for the reason that they are both part of the land and buildings and not "plant and machinery" for capital allowance purposes. If the security fence was moveable or portable (in other words of a temporary nature) I'd maybe treat it differently.

I'd be happy for others to argue to the contrary.

 

[saxondale]

It would be going through my books

 

[Williams lester]

I have to agree with Tom, these are improvements to the land and buildings of your private property. So don't really see what basis you could claim for them.

 

[Tom Egerton]

Just to add that the location of the expenditure may be a red herring. One must first decide whether the expenditure is plant and machinery (using a lot of case law) and then whether it is wholly and exclusively for business. HMRC will allow a percentage of allowances to be used in the case of mixed business/private usage.

 

[JohnGreer]

Hi Jamie,

One way I think that you might be able to justify the expenditure as business relates to the insurance you pay for the van/contents of the van. Has your premium been reduced due to the installation of the security fencing? If it has I think that is a strong indicator that the fencing has a business purpose.

As others have said, I think it is likely that HMRC would at least argue that the cost is part business part private (presumably there will be private cars parked in the secure area at some point), but I would be tempted to claim the expenditure and disclose the justification on your tax computation/tax return and/or separate letter.

The way I look at it is if you don't try and claim it, then you are 100% guaranteed not to get relief. If you claim it with disclosure then you are giving yourself a chance and are being open with HMRC. The worst that can happen, in my view, is that HMRC will disallow the expenditure, and you will have to pay the tax the expenditure saved, however you are no worse off than you would have been had you not claimed in the first place. (OK maybe a small amount of interest)

I would apply the above tactic to any expenditure that you feel there is justification of business use.

At the end of the day, you work hard for your money and you should fight tooth and nail to hang on to (legally of course) as much of it as possible.

Best wishes

John

 

[Tom Egerton]

John

With respect, I think you've missed the whole point of the question which was related to capital allowances. There are some instances of capital items where no relief is available, the most common being tenant's improvements or alterations.

I confess that if you "white box" every area which you perceive to be grey, you will statistically pay less tax. However, if an enquiry goes against you a penalty will undoubtedly be applied in addition to interest and at a higher level than was historically charged.

 

[Zeno]

I have in my head the idea that some "white box" entries are excluded from tax enquiry insurance.

The cost of the fire it all in and see what sticks approach has to be measured in the cost of the professional fees dealing with the resulting enquiry as well as the interest & penalties as mentioned.

 

[JohnGreer]

It's undoubtedly a question of approach. In my view the key issue is the give the business owner choices.

The original question is can I claim this expense? - it seems to me that there is not a single correct answer to the question. Ultimately it may be disallowed, however should it not be the choice of the business owner to decide whether to try and claim it or not, not the accountant?

Yes there may be an enquiry that has to be defended and there may be interest etc but if the business owner is aware of those risks/potential costs and is happy to proceed I don't see a reason why they should be stopped.

I'm not for a moment suggesting that blatant private expenditure be put through, but if there is genuine business justification for expenditure I think all avenues should be explored to obtain relief.

Just my opinion though!

Best wishes

John