West Burton Property Ltd v HMRC

In West Burton Property Ltd v HMRC [2021] UKFTT 160 (TC) (18 May 2021) the FTT held that the company was entitled in principle to a deduction in computing its property business profits for deferred revenue expenditure on maintenance that remained unamortised when the asset to which it related was sold.

The company owned a power station which was leased to and operated by its immediate parent company Power Ltd. It incurred costs in maintaining the power station which it initially capitalised in its balance sheet and then amortised over four years. In 2011 the company sold the power station to Power Ltd for an amount equal to its net book value. That net book value included £65m in unamortised maintenance costs and the company claimed a deduction for that amount in calculating the taxable profits of its property business for the accounting period in which the sale was made. Although it was common ground...

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