B2.409 Assets—improvement or repair
No sum may be deducted in respect of improvements of premises occupied for the purposes of the trade, or improvements to other business assets. Such expenditure will normally rank as capital1.
For periods before 1 April 2016 for corporation tax and 6 April 2016 for income tax, expenditure on the repair of premises or for the supply of repairs or alterations of any implements, utensils or articles used for the purposes of the trade was, however, revenue expenditure and deductible2. Following the decision in Jenners Princes Street Edinburgh Ltd3 it is generally accepted that a deduction of a provision for repairs is not prohibited if the actual cost of the repairs would be allowable (see B3.312).
In Dumbarton Harbour Board4, the Board incurred expenditure in dredging silt from the harbour. The judges noted that this is exactly the same nature as the expenditure incurred in originally making the harbour, and without it, the harbour would have ceased to be a profit making venture, which could point to a capital function. However, with some reservations they accepted the expenditure as revenue in nature with a deduction being available in the year in which the costs were incurred, rather than being spread as the Harbour Board had originally tried to claim.
Regular maintenance of that type would, however, normally be accepted as revenue expenditure and deductible. In Dover Harbour Board5, the harbour was transferred to the Board on terms that it would keep it dredged and prevent certain ships sunk at