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The First Tier Tribunal published a further decision on 18 December 2009 in relation to the fit out of J D Wetherspoon (JDW) pubs.
This follows on from a decision published in December 2007 (for details click here) by the Special Commissioners.
The 2009 decision particularly focused on the application of s25 CAA2001 - Alterations incidental to the installation of plant.
The examples noted below are specific to the facts presented but the reasoning behind the decisions and the application in other situations is potentially far reaching. Wherever a refurbishment or fit out to existing premises has occurred, there may well be potential to identify additional capital allowances and claim these in a current or open tax return.
Splashbacks / Tiling / Flooring
- Definition of splashbacks does not extend to part of a tiled wall that has a splashback function.
- However a splashback to other equipment which produces splashing (e.g. cookers) is allowable.
- Similarly where non slip and wipe-clean floors were installed these were needed for the operation of the equipment, not for the installation of the equipment and therefore were not allowable under s25.
- Tribunal stated that the dividing line is between splashbacks specifically provided for splash producing equipment (which will qualify under s25) and other wipe clean and / or non-slip surfaces which form parts of walls or floors (which are therefore non-qualifying).
- However PVC floor sheeting to a disabled toilet had a special function to assist traction and was allowable under s25.
Cold Store Drainage
- Sloping floor was installed within a cold store so that spillages etc would flow to a drainage channel and associated pump (both agreed as plant).
- Held that inclined floor allowed as incidental to the installation plant, along with demolition costs of old floor to allow for new cold store floor.
- Considered it immaterial that the costs of the inclined floor were relatively higher than the costs of the drainage channel and associated pump.
Lighting
- Toilet lighting allowed as plant as it had trade specific function in that they provided an attractive ambience in the toilets.
- Cutting holes for lighting in toilet ceiling, installing a lighting pelmet (a panel to obscure light fittings) and formation of a drop ceiling in toilets all allowable as plant under s25.
- Such incidental work is also allowable under s25 to other areas (e.g. the kitchen) where the lighting was allowable plant, and also includes holes for qualifying power points.
Toilet Cubicles
- Confirmation that brickwork and blockwork cubicles are allowable under s25, as well as the more typical timber / demountable type.
- Partitions between toilet cubicles and hidden cisterns and pipework also allowable under s25.
Reinforcement of Kitchen Floor
- An existing timber floor was removed and a strengthened concrete floor was installed to take the load of kitchen equipment.
- This special strong floor was required before the equipment could be used at all and the kitchen equipment needed to be installed in the kitchen. Therefore allowable as plant under s25.
Preliminaries
- A global apportionment which accords with commercial practice will normally be appropriate, even where some small value items could be allocated to specific trades.
- For other cases, HMRC are clearly entitled to investigate … to see whether a more specific breakdown is reasonable and proportionate.
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