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Capital allowances, fixtures and sampling: HMRC guidance

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HMRC has invited comments on draft revised guidance on the use of sampling as the basis for capital allowances claims where, for example, a company acquires a number of retail units and fits them out in the corporate style to create ‘a standard type of shop’.

Revenue & Customs Brief 24/12, published last week, explained that many businesses had submitted sampling proposals that were not ‘statistically acceptable, largely because the sample size was too small’. This gave rise to ‘significant risks’ that the claims were inaccurate, HMRC said.

The draft revised guidance indicates that sampling should be considered where:

  • the overall size of the population (the total number of properties or units) allows for a reasonable sample size to be drawn from it;
  • there would be a ‘considerable and demonstrable burden’ involved in analysing the expenditure for the whole population; and
  • the nature of the works undertaken is reasonably similar across the whole population, or ‘appropriate stratified sampling’ is undertaken.

HMRC would not consider as ‘reasonable’ a sample size of fewer than 15 units.

Comments were invited by 31 October 2012 on the revised guidance, intended to replace the capital Allowances Manual guidance at CA20075.