[doganjo]

I was an apprentice CA, failed my finals(when I look back and in view of current ideals, it was totally due to discrimination - no working experience allowed to me on the subjects required - I was used as a checker effectively)

That said, I took an HNC in accounts after I had my kids, and reached A passes in all subjects, then worked ina  number of NHS, commercial, and oil company posts as Company accountant, lead accountant, etc, and now accountant for two charities - 3rd Sector - - so I am what most people call QBE.

I know there's not a great sum involved, but I feel there's a principle involved here. I still think you should ask HMRC, explaining exactly what you did.

[Womble]

DJ & SD - I think you could be right!: (see page 4 here)

New or repairs? Once a simple question but
now complicated by recent changes in tax
legislation. Any farmer considering a new build
or remedial works to infrastructure should take
advice and proceed with care.
Until their abolition in 2011 Agricultural
Buildings Allowances offered tax relief on
capital expenditure on new buildings and other
works. Although no reliefs or capital allowances
normally apply to the shell of a building, some
integral features may qualify for relief as may
anything that qualifies as plant and machinery.
Moving away from items specifically qualifying
for capital allowances we reach the accountants’
favoured ‘grey area’ where the division between
capital and revenue expenditure is blurred.
If expenditure can be categorised as repairs,
a full write off can be claimed. Lawyers dine
out on the case law around the definition of
‘repairs’ and HMRC‘s guidance notes seem
to deny relief where there is some element of
improvement although, for example, there are
specific paragraphs in the Revenue Manuals
confirming that a drainage scheme can
qualify as repairs provided it replaces a prior
comparable scheme.
Works which restore buildings or infrastructure
to their original function are in line with the
general principle of ‘making good’ provided any
element of improvement represents no more
than the application of contemporary materials.
Where there are elements of improvement and
of repair, costs should be split. Giving earlier
thought to this can enable the gathering of
appropriate evidence in support of the claim
for relief.

In our case, we had two areas of the field where 'springs' were bubbling up out of the ground. When I dug holes to see what was going on, I hit old clay field drains, which were blocked downstream of the 'spring', and were hence leaking water out which then bubbled to the surface.

The repair involved getting a digger in to dig up the existing blocked / shattered clay drains from the 'spring' down hill, and to replace them with plastic pipe. So, if that's not a repair, what is?  Just got to convince my accountant now! 

[doganjo]

Copy and paste this into your letter - and tell him you are going to ask HMRC for advice.  As I said a few hundred pounds tax isn't the issue here.  Just don't let this feel like part of your 'day job' 

[Marches Farmer]

Don't forget you're paying your accountant to be on your side.  Is he making enough of an effort?

[Louise Gaunt]

With regard to asking HMRC about tax issues, we went on a course run by HMRC for new small business owners. All the way through the course it was emphasised that if we were in doubt, to contact them for advice, and contrary to some views, if you do ask questions, seek advice etc it is less likely to prompt a visit from the inspectors, as they will categorise you as someone who is trying to get it right. In this case I would definitely ask HMRC for their view. In my lay person view, fixing land drains is a repair not an improvement.

[waterbuffalofarmer]

couldnt there be an arguement for both sides though? For example it is definitely the repairing of a drain, but they could argue that the improvement part is when you replaced the clay for plastic? Thus improving the drain and its efficient working. Soz I am just trying to see both sides of the coin here

[Womble]

Except new plastic is far cheaper than new clay.....


I've bounced it back to my accountant anyway (which will be funny if they google this, because this thread is now the second hit when searching for tax treatment of farm drainage  ). I'm not going to fall out with them over it though - our smallholding is primarily about living an enjoyable sustainable life; I have enough accountancy worries without overcomplicating the farm stuff!

[doganjo]

Yes, but they need to get it right for other clients!