Moonlight Textiles Ltd v HMRC

In Moonlight Textiles Ltd v HMRC (TC00755 – 8 November) a company (M) arranged for building work at its premises which involved substantial alterations and improvements. It claimed a deduction for the cost of this work. Following an enquiry HMRC issued an amendment on the basis that £34 000 of the expenditure should be treated as capital. M appealed contending that the expenditure should be treated as a repair. The First-Tier Tribunal rejected this contention and dismissed the appeal. Applying dicta of Buckley LJ in the (non-tax) case of Lurcott v Wakely & Wheeler CA [1911] 1 KB 905 ‘repair is restoration by renewal or replacement of subsidiary parts of a whole. Renewal as distinguished from repair is reconstruction of the entirety meaning by the entirety not necessarily the whole but substantially the whole subject-matter under discussion.’

Why it...