40 |
Expenditure on safety at sports grounds may qualify for the more generous machinery and plant allowance.375 |
| Qualifying hotels may also obtain the benefit of this allowance.376 |
24A.3.2.5 Parts of Buildings |
If only part of a building qualifies for an allowance, an apportionment is made. However, the whole cost is allowed where the cost of the qualifying part is 75% or more of the total cost.377 This raises the difficult problem of defining a building. If a building includes an office, the cost of which is less than 25%, an allowance is made in respect of the whole cost. If, however, the office is a separate building, no allowance can be made even though its cost is 25% or less of the total cost of the building. Separate blocks which are not physically integrated do not form one building.378 |
24A.3.2.6 Example |
| 30% of the area of a factory building is used as a showroom, and the capital expenditure on the showroom area is 20% of the total. The expenditure on the showroom is less than 25% of the total cost, so no apportionment is necessary. |
| 24A.3.3 The Relevant Interest—Who can Claim the Allowances? |
| The concept of ‘relevant interest’ is central to almost all aspects of the industrial buildings allowance. Although not relevant to the initial allowance—which is claimed by the person who incurs the cost of the building—it is vital to the other allowances since writing down and balancing allowances may be claimed only by the person with the relevant interest.379 On a sale of the relevant interest the purchaser may be entitled to further allowances and the vendor to a balancing charge.380 |
| The ‘relevant interest’ means the interest in that building to which the person, O, who incurred the expenditure, was entitled when it was incurred.381 So, if a lessee, L, spends money improving property, L can claim the allowance—but L’s landlord cannot. If O, the owner of the freehold, incurs the expense and later leases the building to someone else, O may use the allowances as part of his schedule A business;382 it is, however, essential that the lessee use the building for qualifying purposes.383 A person entitled to a highway concession in respect of a toll road is treated as having an interest in the road and that interest can be a relevant interest.384 |