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Where Taxpayers and Advisers Meet

inland revenue enquiry

monkey
Posts:4
Joined:Wed Aug 06, 2008 3:03 pm

Postby monkey » Wed Jun 11, 2003 9:04 am

Hi

IR opened an enquiry on two things from my self assesment form,about six weeks ago for repairs that were carried out and for services provided.

I had claimed about £500.00 for common parts carpets incl fitting BUT I had sent a little explination saying that I DO TAKE 10% WEAR AND TEAR ALLOWANCE but on common parts i don't get any rent so i am deducting it and if it's not allowed then pls adjust my figures.
They said this is not allowed.ok I have no major problem with that but it is a service that i provide for my tenants to walk on,and since i don't get rent for common parts where do i deduct it from? I think this is a stupid rule.

I also had quite a bit of repairs/replacements because nothing major was done for the last five years and when the Housing association gave me back the property,it was in a state. I HAD to replace the bath/toilet/wash basin/etc/There had been so many patch repairs and the leaks etc,it seemed sensible and cheaper in the long run plus leaving it in that state i would not have found a tenant.There was a plastic bath before and i put in a steel bath,because the plumber had once said to me that this baths are not allowed in flats,regulations have changed so whenever you decide to change it make sure it is not of this material.
Anyway the total cost inc fitting and supply came to roughly £1300.00.

I also had to replace a few kitchen cabintes as they were rotted and damaged. Cost of the kitchen was £450.00 approx.
I had a letter from British Gas that the boiler was not installed properly or something like that.
Anyway I called in a Corgi registered guy,gave him the letter and told him to sort it.He had to reposition the boiler and charged £300.00.

Inland revenue are now saying that this falls within capital expenditure and also consider that there has been certain amount of improvement element involved within the works carried out.

"With respect to the removing and fitting of a the new kitchen and bathroom I would like to point out that the cost of originally installing these fixtures would not have been allowable deduction,therefore,the additional cost of installing the replacement fixture is also not allowable.Therefore they suggest adding back 20% this would incorporate both the capital and improvement element."

I do appreciate the amount involved are not big and sometimes it is better to agree just to get it out of the way but to me this seems crazy,the 10% i claim is for furniture,etc this i would class as repairs because what i had/ were beyond repairs and in fact the bath suite what i had was of much better quality so i did not put more expensive one but the old one was about 20 years old and everything has a life span.

Are inland revenue correct in what they are saying? please advice if any one knows the answer.

Thank you

Ian McTernan CTA
Posts:1232
Joined:Wed Aug 06, 2008 3:02 pm
Location:Bedford
Contact:

Postby Ian McTernan CTA » Fri Jun 13, 2003 4:19 am

Firstly, it is not strictly true that you do not receive rent for the common parts, as these would be provided as part of the rental agreement.

Fitting of anything new is usually resisted by the Revenue as you can claim for 'repairs and renewals', not replacement of entire assets except in very limited circumstances.

The wear and tear allowance of 10% of gross rent is intended to cover the eventual replacement cost of the items you mention. they are being generous in allowing the add back of only 20% and you should take it.

Sorry not to be more positive.

Regards.

Ian McTernan CTA
ian@imcternan.com
McTernan Associates Ltd
Chartered Tax Advisers
Bedford
Email through link on website:
http://www.imcternan.com

monkey
Posts:4
Joined:Wed Aug 06, 2008 3:03 pm

Postby monkey » Fri Jun 13, 2003 6:35 am

Dear Mr McTernan

Thank you for yr reply.If you have time can you tell me what the diffrence is between renewal and replacement.

Regards
Monkey.


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