From time-to-time HMRC issue summary guidance on various tax issues which advantageously brings together practical and statutory issues, whilst also highlighting areas where their experience is that errors may be often found.
On 27th July a comprehensive summary of HMRC concerns regarding capital allowance claims was issued. The report, including a very handy “Recommended approach to claims and record keeping” runs to some 26 pages, and whilst it contains nothing new, it does bring together all the “risk areas” on capital allowance claims into a single document. In particular it deals with the potentially tricky areas of:
- Is it capital at all?
- Is it plant and machinery?
- When was the expenditure incurred (and what can be included)?
- How to deal with “milestones”?
- What happens when an asset is used in another trade?
- Leases, HP agreements and when is the asset brought into use?
- Fixtures and fittings in buildings
- Assets in residential properties
- Special rate assets
- Connected persons and non-business usage
The “record keeping” section effectively recommends a fixed asset register for tax purposes and also strongly suggests that a detailed computation should be included with a tax return – notwithstanding that the standard self-assessment return does not require this.
The full document can be found at GOV.UK
*the views expressed are the author’s and not ICAEW’s