Commentary

D6.318 Implications on a transfer of a trade where 75% common ownership—other sundry tax issues

Corporate tax
Corporate tax | Commentary

D6.318 Implications on a transfer of a trade where 75% common ownership—other sundry tax issues

Corporate tax | Commentary

D6.318 Implications on a transfer of a trade where 75% common ownership—other sundry tax issues

Initial repairs carried out by successor company

The mere fact that the ownership of an asset changes before repairs are undertaken does not in itself make the repair a capital expense1.

Such repairs will generally fall to be treated as revenue if they would have been treated as revenue if there had been no change in ownership.

Exceptionally they will be treated as capital if, for example, the asset could not be used by the successor before undertaking the repairs or there is evidence that the purchase price of the asset was substantially reduced because of the dilapidated state of the asset. This is not the case if the purchase price merely reflects the reduced value of an asset due to normal wear and tear2.

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