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Seven years ago, Mr and Mrs A purchased personally a freehold hotel for £450,000. A limited company, with Mr and Mrs A as equal shareholders, was formed to undertake the day-to-day trading activities. A hotel business had previously operated from the same premises for many years. The cost was apportioned as to £75,000 for fixtures, fittings and equipment and £375,000 for premises. No value was attributed to goodwill and no capital allowances have been claimed in respect of the fixtures, fittings and equipment.
Seven years ago Mr and Mrs A purchased personally a freehold hotel for £450 000. A limited company with Mr and Mrs A as equal shareholders was formed to undertake the day-to-day trading activities. A hotel business had previously operated from the same premises for many years. The cost was apportioned as to £75 000 for fixtures fittings and equipment and £375 000 for premises. No value was attributed to goodwill and no capital allowances have been claimed in respect of the fixtures fittings and equipment.
Over subsequent years the company incurred significant costs on various alterations and improvements and refurbishments. Mr and Mrs A now wish to retire and the hotel business (including premises) has recently been valued at £1.6 million.
The company has spent £250 000 on alterations and improvements (on the company's balance sheet as tenant's alterations and improvements)...
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