Readers’ forum: Is remediation of a sinkhole a capital item or revenue

Our limited company client owns two apartments in a large block of flats. The area is subject to sinkholes and a major hole has appeared in the backyard of the apartment block.

I am aware of rulings that a hole/cavity is not plant implying that it is not possible to repair but also that the remediation costs of pollution spills would be a profit and loss item which is a form of repair. One line of argument is that putting down a stabilising layer and filling in the hole is equivalent to building a new part of the property while the counter argument is that it is making good part of the building that has failed.

A large rectification bill of £30 000 to £40 000 has also been incurred and there is a legal dispute about how the contractors were appointed and their connection to...