Readers’ forum: Are calculations correct with capital goods scheme?

One of my clients trades as a financial services business and 80% of their income is VATable as advice and 20% is exempt commission for arranging investments and loans. Three years ago the client purchased the freehold of their current trading premises for £247 500 plus VAT and claimed 60% input tax with the standard method for partial exemption purposes. The legal fees were £3 000 plus VAT so we claimed 60% input tax on these fees and capitalised the fees to the balance sheet as a fixed asset.

Since then we have carried out capital goods scheme (CGS) adjustments each year because the amount capitalised in the accounts exceeds the threshold of £250 000. And even if this figure was incorrect the total of £250 500 for costs excluding VAT is also over the threshold.

However I understand the relevant figure might be £247...