Hot Water Cylinder

[CG]

Hi

Please can you advise on the following with regard to a let property.

The hot water cylinder had to be replaced - can this be taken as a repair expense? I am assuming it has nothing to do with the wear and tear allowance as this is not a furnishing that you would expect a tenant to provide.

Many thanks

[Peter D]

Yes it is a repair. Regards Peter

[CG]

Thanks Peter - I thought as much.

This was not claimed as a repair on the previous year's tax return - can I just adjust the anlaysis in this years tax return? As losses have been carried forward there will be no change to the amount of tax due in the previous year.

Many thanks

[Incredulum]

Yes, that's fine.

[maths]

Incredulum, for my education, why is it not necessary to submit a formal amendment within the time limit to the prior tax year's return.

[Incredulum]

Hello Maths!

Because it is the accounts that are wrong rather than the tax return*. The accounts failed to accrue correctly for the expenditure in the appropriate year, so it is appropriate to book the deduction in the accounts for the subsequent year. And hence the tax follows accounts prepared under GAAP.

I agree it is possible to resubmit the accounts and tax return for the earlier year, but there is no tax advantage to so doing. If it were a company that had failed to accrue the expenditure in the accounts filed at Companies House you would not be suggesting that the filed accounts should be re-filed, I think.

So it's an accounting question, really. And the question is "are the accounts prepared under GAAP?" And given the value of a house, is failure to report replacement of a hot water cylinder likely to show accounts that are materially incorrect? I don't think so, hence it is appropriate to address in the following year.

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* The tax return is obviously incorrect if the accounts are "incorrect". But the tax return is based on accounting profit.

[maths]

Very appreciative of your kind and clear response; many thanks.

Need to mull over; will revisit if further help needed.