Readers’ forum: Diversifying downer

I act for a client who owns a limited company emptying cesspits and suchlike but who considered diversifying into the establishment of a waste treatment plant. Having spent about £20 000 on expenses such as a planning application and permits he decided not to proceed with the project. My view is that the costs are capital and not allowable but the client is persistent in asking why he cannot obtain relief at least on the £9 000 cost of the Environment Agency application.

Trying to prove a negative is difficult and I have quoted to the client the rules on tax relief for a taxi licence in HMRC’s Capital Allowances Manual at CA21250 which states that expenditure on the right to trade does not qualify for capital allowances.

I have also referred to CTA 2009 Pt 3 ch 9 (‘Trade Profits: Other Specific Trades’)....