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Recovering costs of decorative, branded
and trade related building features
Are there any relevant cases? Sometimes these costs can be greater
IRC v Scottish & Newcastle Breweries than the equipment itself.
Ltd (1982) was a landmark case in the
consideration of ambience. It was Is sound insulation allowable?
found that wall plaques, sculptures Usually a claim for allowances is accepted,
and tapestries performed an important but you should retain all acoustic survey
function to “promote the trade and reports and project photos in the event
attract custom” in the business. This negotiations are needed with HMRC.
extends allowances to artworks and all
Mark Hoskyns
types of decorative finishes used within Are capital allowances relevant for
a hotel. pod accommodation or tree houses?
Generally, if the structure is a permanent
Discovering the full extent of capital My tax inspector could just say standalone feature with incoming mains
allowances on decorative hotel ‘plant special panelling forms part of the services, electrical, water then these
fixtures’ is something of a silver lining property? together with the internal plant fixtures
to recover the otherwise sunk costs of There are a number of potentially and fittings should qualify. The entire cost
property improvements. Relevant features qualifying items that are contentious such of the building structure itself though, for
are those used in the hotel business, as panelling and partitions. Documenting tax purposes, is the setting “in which” the
attached to the property and not normally the rationale for choosing a design option hotel business is carried on rather than
removed in the event a property is sold. is helpful, particularly for decorative the thing “with which” you carry on your
features and take advice on descriptions business. If pod accommodation is easily
15% of fit out costs including related fees for these sorts of items in a claim for moveable the entire cost is sometimes
for the year the works are completed. capital allowances. fully deductible.
Hotel Capital Allowances Questions We have created an events stage, So the intended use is critical?
Answered CPD, available from MK Capital can I claim? Exactly, the intended use for any
Allowances, Mark Hoskyns explains. Yes, the actual support steelworks, building feature or structure will
electrical supplies and associated influence how likely you are to qualify
We installed high quality floor and structural engineering and design fees for capital allowances, especially for
ceiling materials, do these qualify can be included with your claim for trade related items in hotel or leisure
for allowances? allowances on the lighting equipment. properties more generally.
Real after tax savings are often around
In this extract from 50 Essential
Helpfully the tax legislation does
specifically provide for claiming
deductions for costs of decorative
assets intended for “the enjoyment of
the public in hotel, restaurant or similar
trades”. However, in practice, it’s essential
these items are accurately described
and referenced as there are conflicting
case law decisions as to how distinct the
decorative features are from the hotel
building structure, which itself no longer
benefits from tax allowances. Many
specific items have become allowable
after very involved and complex tax
cases, which you can now benefit from if
you have similar circumstances.
April 2017
www.hotelowner.co.uk
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