Readers' forum: Cart before the horse?

My client is about to construct a large property as a furnished holiday let (FHL). He has no other such properties. There will be substantial expenditure eligible for capital allowances (CA) within the construction cost. He has other income and would like to make an annual investment allowance (AIA) claim. We know he can relieve losses arising from CA claims sideways by way of ITA 2007 s 120 if he elects to prepare GAAP accounts and subject of course to the cap on sideways losses.

However we think pre-commencement expenditure cannot form the basis of an AIA claim because the general rule that such expenditure is deemed to have been incurred on the first day of trading is disapplied for AIA.

He is therefore thinking of starting an FHL business by acquiring a ready-made property that will definitely qualify. Because for CA purposes all FHL properties are deemed to be...