Entirety of the asset

The taxpayer company traded from premises on an industrial estate. It claimed deductions for expenditure including the costs of diverting telecommunications cables relaying and resurfacing a carriageway repairing a car park and reinstating a footpath to the main office.

The taxpayer argued that this was revenue expenditure: a series of jobs mostly relating to repairs carried out to the main carriageway. HMRC said the works constituted a scheme of alteration that should be looked at as a whole.

The First-tier Tribunal accepted the taxpayer’s contention: there was no scheme of alteration. The main carriageway was in need of repair; the fact it entailed expenditure on the replacement or renewal of some of the asset did not make it a capital outlay. The character of the entire asset remained the same.

The cable works did not change the entire system only the part near the...