Commentary

B2.309 Capital vs revenue expenditure—summary of tests to consider

Business tax
Business tax | Commentary

B2.309 Capital vs revenue expenditure—summary of tests to consider

Business tax | Commentary

B2.309 Capital vs revenue expenditure—summary of tests to consider

The cases mentioned in both this Division and in Division B2.4 provide many examples of the type of payment considered by the courts and the decisions at which they have arrived. The general principles underlying the distinction between capital and revenue items are examined at length in Division A1.2. Some consideration has also been given to the distinction between revenue and capital expenditure for the purposes of calculating trading profits in Division B2.2. It has been said that while it may be possible to reconcile the results of the various cases, a reconciliation of all the reasons given by the judges was 'certainly not possible'1.

No attempt is made here to reconcile the decisions but a number of questions are suggested, which may need to be asked in considering the nature of expenditure. HMRC takes the view that there is no infallible criterion in deciding the issue, as the facts and circumstances of each case will be different2. The weight to be attached to the answers must

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