JD Wetherspoon plc v HMRC  UKFTT 374 (TC): capital allowances - fitting out and refurbishing public houses
The First Tier Tax Tribunal decision for the second part of the capital allowances case JD Wetherspoon Plc v Commissioners for Her Majesty's Revenue and Customs has been released. Deloitte acted as instructing accountants on behalf of JD Wetherspoon. Many technical areas under appeal in this case are pertinent to the majority of tax payers incurring capital expenditure on property, so this case has wide-ranging ramifications.
This was unusually the second stage hearing before the Special Commissioners/Tax Tribunal in a case relating to the availability of capital allowances for the taxpayer’s extensive capital outlay on property fit-out and refurbishment expenditure in the year ended 31 July 1999.
Key areas of expenditure covered by the decision included:
- Lighting and electrical installations – considerable debate was undertaken with regards to the eligibility of lighting throughout the public houses and other electrical installations. Whilst the distinction is less contentious under the new capital allowances regime, the scope for restating historic expenditure is significant.
- Decorative assets including wooden panelling
- Building alterations incidental to the installation of plant & machinery including the replacement of various floors, drainage installations, kitchen and toilet walls and wall surfaces
- Preliminaries and professional fees – there has been debate between the taxpayer and HMRC for many years about the appropriate methodology for allocating project preliminaries (overheads) and fees across project costs. The case provides clarification on an appropriate methodology for identifying tax relief available in respect of such costs.
If you have incurred expenditure on constructing or refurbishing property in recent years or are planning to in the future, the outcome of this case is likely to be highly relevant. Please contact Peter Millwood (020 7007 2741) or Helen Netherwood (020 7007 2407) from our Tax Depreciation team to discuss how Deloitte can help you to identify significant tax savings in this area.