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Hello sir, hope you’re doing good.
I am referring to query 4 of the question relating to property income in corporation tax.
We need to adjust (or if correct not adjust) for this query.1) Ecommerce plc has claimed a deduction for repairs of 95300 in respect of a warehouse which was purchased on 21 May 17. the warehouse was purchased in a dilapidated state and could not be let out until the repairs were made. this fact was represented by reduced purchase price.
Sir my in my opinion they should add back the amount to property income, as it appears to be a capital expenditure for which deduction should not be claimed.
However they have not added back the amount or made any adjustment to property income with regards to this query.Can you please explain why?
I regret I do not have the question or answer to give you an opinion but you are correct the repairs expense should indeed be added back – I cannot imagine that the Kaplan answer has got this wrong so I would suggest you go back and thoroughly check the suggested answer – that said your treatment is correct!
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