PTC: Rental Income - Repairs to roof after storm??

imeldabye

Kaplan says you should allow repairs to a roof after a storm as expenditure, but BPP says not??
does anyone know the answer?
thanks:001_smile:

visha

The answer is arbitrary. It all depends on how much roof damage has it been.
I would treat it as a revenue expenditure and claim as repairs but Inland revenue may object on the grounds that it is a capital expenditure and therefore it needs to be capitalised and depreciated.

Like I said I would cliam it as a revenue expenditue and argue for it unless it is it quite obvious that it is a capital expenditure

speegs

I know the question you are referring to. I had the same problem.

The answer in fact is that because rental income and expenditure is calculated based on the accruals basis the roof repairs are not taxable because the date of the damage occurred in the previous year.

"Ah but you are wrong I hear you cry!" I am not wrong, it is BPP who are wrong, BPP have got the date wrong. If you compare the BPP exam paper to the one on the web you will see that BPP have screwed up the dates when copying the exam into the book. Therefore because the damaged occurred in the prior tax year it is not a deductable expense in the current tax.

I hope that makes sense

Give me a shout it you need any further help and good luck on the 20 June.

Speegs.

imeldabye

and in an exam - would you claim it as rev expenditure and put a foot note to the examiner?
thanks for coming back on it

imeldabye

aha!
thanks speegs, appreciate that
i am a bit concerned - i think i am on top of it all and then I do another practise exam and I always end up missing something!

speegs

Provided the expense incurred related to an occurance in the current tax year then yes I would put it in as revenue expenditure (with a note if you want to be really safe). However, the roof repair occurred in the year 2006/07 which is why it did not appear as a revenue expense. You would only know this though, if you look at the paper on line and compare the two.

Well done BPP 1 out 10 again.

Speegs

speegs

Same here. I keep making stupid calculation errors. I will have to be really careful in the exam but I am sure we will both be fine.