Expenditure on plant and machinery in rental properties

The taxpayer bought three properties which he let as houses of multiple occupancy. He claimed capital allowances for expenditure on plant and machinery in the communal areas of the buildings. HMRC said the expenditure did not qualify because it was incurred on a dwelling house. The taxpayer appealed.

The expenditure was mainly on installations of heating and air conditioning general power lighting security and telephone; gas and electrical connections; fire alarms and smoke detectors; fixed furniture; carpeting; incoming mains connections; and mechanical ironmongery. The sellers from whom the taxpayer bought the properties had not claimed any capital allowances that might have been available.

The First-tier Tribunal agreed with HMRC’s view that the definition of dwelling house should take its everyday meaning. In effect it should be based on the existence of the facilities required for day-to-day private domestic living. Individual bedroom on their own would...