Amount to be brought into account on fixtures claim

In May 2011 the taxpayer Glais House Care Ltd bought Glais House from the administrators of the previous owner KCH. The vendor showed in the contract £1 for all fixtures and fittings plant and machinery and £35 000 for loose equipment. The parties agreed a balancing allowance of £50 803 (including some residue allowances from prior expenditure by KCH). 

After a valuation report the taxpayer submitted a capital allowances claim for fixtures in the property for £318 792 including £13 226 on a cold water system £17 006 on the mains electrical system and £35 000 on equipment.

HMRC said that because KCH had reported only £35 001 in the agreement for the sale of the assets and business to the taxpayer this sum should be treated as the amount KCH ‘has been or is required’ under CAA 2001 s 185 to...