Repairs and renewals
HMRC have issued Revenue and Customs Brief 05/13 Direct tax: Guidance on repairs and renewals of assets, its draft guidance on what is a repair for direct tax purposes. HMRC states that the guidance will be included in the Business Income Manuals (BIMs) later in the year and that they will also issue further guidance for tax professionals.
The brief highlights potential updates to the following areas of the manuals:
BIM46900 – Specific deductions: repairs & renewals: contents
BIM46905 Role of accountancy
BIM46910 What is a repair: the ‘entirety’
BIM46915 What is a repair: improvements
BIM46920 What is a repair: different materials
BIM46925 What is a repair: changing technology
BIM46930 What is a repair: Notional repairs
BIM46935 What is a repair: effect of a change of ownership
BIM46945 What is a repair: Assets on which capital allowances given
BIM46950 What is a repair: Character of the asset
BIM46990 Renewals basis – Expenditure before 2013
The draft BIM sections highlights with examples the treatment of expenditure post 6 April 2013 for the purposes of income tax and post 1 April 2013 for the purposes of corporation tax.
BIM46990 – Specific deductions: repairs & renewals: Non statutory renewals basis is guidance relating to expenditure on replacement plant and machinery highlights the pre 6 April 2013, for the purposes of income tax; and pre 1 April 2013, for the purposes of corporation tax treatment of expenditure.
The draft changes to BIMs can be found here.