Business use costs

TAB

I have a new client who did her own tax returns for 2007 & 2008. HMCE didnt take her loss from 2007 into 2008 so Im looking to amend the 2008 return but when i looked back at her loss from 2007 it mainly came from the building costs of her conservatory. She is a personal trainer and has kitted out the conservatory as a gym for her clients. She is currently calculating business hours per week for me but it is approx. 10 hours a week. The only private items within the conservatory are a washing machine & a dryer. Im undecided as to allow the costs through or put in a high use of home charge adjusted to the business use per week.

Any thoughts would be greatly appreciated.

groundy

I would not allow the cost of building the conservatory but would certainly claim a high use of home.

TAB

Thanks for your reply Groundy.

farmergiles

I agree with Groundy. If you allow the Conservatory costs, there are going to be tax implications if & when she sells the house.

TAB

Good point Farmergiles. Thanks for your input.

Hasan.Ahmet

Hmce

No more HMCE please! It's been HMRC for a while now.
Slip of the tongue no doubt.

deanshepherd

Why were any of the building costs in her P&L anyway? Surely it is a capital item?

Hasan.Ahmet

Business Use Costs

Agree with Dean. But at the same time I would also approach the subject of claiming capital costs on the main residence when used for business for the reason of capital gains issues.
Simple principle for revenue or capital is whether there is enhancement and or improvement for the latter or repairs and or maintenance for the former.

TAB

Dean the costs were included in the P&L because my client did her first two returns on her own before she sought my help.