Glais House Care Limited v HMRC

by admin on July 25, 2019

HMRC maintained the Capital Allowances claim should be limited to £35,001 however Judge Gillett revised this to £205,912.

Owners of care homes, pubs, restaurants or hotels purchased prior to April 2014 may wish to revisit their claims with an independent capital allowances valuation to overwrite the contract allocations in light of this decision.

This could mean dramatically increasing the previously claimed amounts.

The decision in Glais House Care Limited v Commissioners for HMRC [2019] UKFFT 0059 (TC) highlights the complexity of capital allowances on second hand property purchases and specifically the approach and restrictions on valuation of capital allowances on the purchase of an existing care home, Glais House in Swansea. HMRC challenged the purchase claim made by Glais House Care Limited (Glais House) following their claim for plant & machinery allowances (PMAs) and integral features allowances (IFAs).

HMRC took the line that the contract allocation was applicable, with the disposal value set at £35,001. HMRC said that, because KCH had reported only £35,001 in the agreement, this sum should be treated as the amount KCH ‘has been or is required’ under CAA 2001 s 185 to bring into account. Thus the capital allowances Glais House could claim should be restricted to £35,001.

Glais House, however felt that their valuation at £318,792 was the correct figure. Although, there did not appear to be any reference at this stage to any prior claims by KCH – which should have been part of the due diligence in preparing a valuation claim.

Judge Philip Gillett, hearing the case at the First Tier Tax Tribunal, determined that whilst the just and reasonable apportionment was the correct valuation approach, this was still subject to a restriction under s 62(1). [CAA 2001 s 62(1) – ‘any disposal value required to be brought into account…is limited to the qualifying expenditure incurred by the person on its provision’] This capped the disposal value brought into account by KCH at their original cost and so restricted the subsequent claim.


It was common ground between the parties that that the original qualifying PMA expenditure by KCH was £220,912 but Judge Gillett felt it was appropriate to exclude the £15,000 incorrectly claimed by KCH for cold water and thus the total was reduced to £205,912. This was accepted as the base figure to which KCH’s disposal value was set.

Quite a bit higher than the £35,001 contended by HMRC !!!


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