Is it a building?

KaelaH

I have a client that has a business in the Open Market locally, I would say a stall except that they're not anymore. Each "stall" at this market is actually a small unit. The traders are given a framework which has metal shutters but they have to fit it out how they want. My client runs a hairdressing business from this so has fitted out the inside with plasterboard walls and flooring.
I am trying to figure out whether these walls and flooring are to be counted as buildings or as plant or machinery. I keep looking through the legislation and can't quite make head nor tail of it.
My first thought is that they are a building but then it is a temporary structure. The flooring would appear to be a cost counted as buildings but what about the partition walls?
If they are to be treated as a building am I right in saying that the capital expenditure is just this, and no allowances can be claimed?

clegganator

Does the client rent the stall? If so I would of said all the costs are just repairs & renewals. They don't own the 'building' and the walls etc can't easily be taken when they go.

KaelaH

Yes, they rent the stall. I'm not sure what would happen if they left, I'm guessing they'd have to return it to its original state.

PGM

KaelaH wrote: »

Yes, they rent the stall. I'm not sure what would happen if they left, I'm guessing they'd have to return it to its original state.

We rent a unit, we capitalised some work to the building over the remainder of the life of the current lease.

jamesm96

I believe (though in light of the renting comments above this might be a moot point) that the rule on Plant & Machinery is that it must be a tangible item which carries out a function in your business, as opposed to providing a setting in which you carry on that business so, renting issue aside, it'd be a building in my view.

KaelaH

Thanks, I think i'll run with it as a building, better be safe than sorry. I have been through the legislation several times and just can't seem to see how it can be P&M or revenue - nothing really covers what it is except for the buildings, altho with it being temporary its thrown a spanner in the works

JodieR

It is a tricky area - I looked into it years ago when a client of mine moved into a rented building (which is actually a building, not a temp structure) and they paid about £500 putting up internal walls etc and really there didn't seem to be any relief for these kind of costs except if they were to sell the business as a going concern, in which case (over-optimistically speaking) it could lower the amount of CGT payable.