Apportionment of consideration on a just and reasonable basis

The taxpayer’s business was the provision of supported living and other care services for adults with autism and/or a learning difficulty. It bought the property in February 2015 for £875 000. The sellers had occupied the main house and used other buildings for a children’s nursery.

There were three outbuildings: an annexe which was divided into two separate buildings each with bathroom kitchen living area and bedroom; a brick building with a pitched roof which appeared to be an office although was also referred to as a ‘multi-sensory room’; and a timber constructed summerhouse.

The taxpayer turned one part of the annexe into a self-contained flat for two adult clients. The main house was used to accommodate four other clients the office became a music room and the summerhouse a relaxation room – both used by clients.

As it was a company the taxpayer was subject...