I am the owner of the building. It is a ground floor shop with a two storey flat above. I let both the shop and flat.
The alterations consist of an alteration to the shop access at the front and a rear extension to the shop.
The repairs consist of removing fallen brick walls from the garden area and replacing with close boarded fence, tidying the garden and weed proofing with terram and pea shingle. Also repairs to soil water drain now exposed when work started and repairs to flat roof over shop entrance that started to leak in the storms the day before work started. The roof has so far been patched but needs replacing.
Thank you. It is several years ago that I studied this and at that time, you could argue your case with the tax inspector until you had agreed a position with him. I understand that the situation now is that if you have filed your return and made a claim that is not correct, a penalty is payable based on the extra tax that is ultimately payable after the investigation has concluded. At the time that I studied this, no allowance could be claimed single glazed windows with double glazed. The notes that you directed me to indicate that that has changed. The notes refer to residential letting whereas the part that is being repaired and altered is a shop.
The repairs at the back of the property have been needed time and I put them off because access was extremely difficult whilst the shop was occupied and I was planning to do the shop alterations but it has taken a couple of years to get planning consent. To gain access to the garden, the builders have knocked a hole in both front and back of the shop.
I should have said that the electrics which were about 80 years old were condemned and I had to have the flat rewired to carry on letting it. The shop should have been done at the same time but I managed to put it off as there was only low usage and again, I had planned to have the shop altered. That is now being done at the same time as wiring the extension.
The flat roof over the shop front although needing repair is over the alterations to the entrance and the notes that you directed me to indicate that this would not be a repair as it is part of the structure but the roof will be the same roof doing the same job and is in need of replacement to stop the leaks.
As the total of all of the repair element is likely to cost in excess of £10,000 plus VAT out of a total price of about £85,000 including VAT I would like to be able to claim as much as possible of this against profit but I do not want to be in a position of risking an enquiry that can find an error and thus potentially incur a penalty. It is bad enough paying the tax due let alone an unnecessary penalty.
Thank you. Does the repair work have to be billed as we go along to justify this or can I apportion the contract based on the builder's costing of the various repair elements that have been involved in the project?