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Cairnsmill Caravan Park (TC2580)
The taxpayer was a family firm that operated a caravan park. Surface restoration work – replacing grass with a hardcore surface – was carried out in 2008 at a cost of £89,210, which was claimed as a trading expense against the partnership profit for 2008/09.
HMRC refused on the basis the work was of a capital nature because it created a permanent improvement for the business.
The First-tier Tribunal noted that only a very small area of the caravan park had been resurfaced. The work had not enhanced the facility. In fact, the hardcore surface had “less aesthetic appeal”, was not suitable for children to play on, and had even given rise to customer complaints.
The tribunal concluded it was a revenue expense and deductible for tax purposes.
The taxpayer’s appeal was allowed.
