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The taxpayer was granted outline planning permission for an open-air market with trading limited to weekends. The taxpayer, however, began trading on weekdays, so had to make a further planning application.
Permission was given to trade on ten weekdays a year, as well as weekends, but the taxpayer breached these terms by trading every Wednesday. The council issued an enforcement notice, against which the taxpayer appealed.
The company incurred professional fees in connection with its planning appeals and claimed these as a deduction in its corporation tax return. HMRC refused the claim on the basis that it was capital expenditure. The company appealed.
The First-tier Tribunal said that the fees were essentially one-off fees for single pieces of professional advice. The expenditure went beyond maintaining an asset, but was made to try to alter the state of an existing asset. The fees should therefore be treated as capital expenditure.
The taxpayer’s appeal was dismissed.
