Ken Moody goes back to basics in considering what is allowable expenditure for capital gains tax purposes and reminds readers that the issue is circumscribed by specific legislation.
Most readers will be aware that capital expenditure cannot be offset as an expense against income.
There is a huge body of case law concerned with the (sometimes fine) line to be drawn between capital and revenue expenditure. One of the founding principles was stated by Viscount Cave in Atherton v British Insulated and Helsby Cables Ltd, HL 1925,10 TC 155, describing capital expenditure as being “made, not only once and for all, but with a view to bringing into existence an asset or advantage for the enduring benefit of the trade”.
Allowable expenditure
Whether such expenditure may instead be allowable for capital gains tax (CGT) purposes most frequently arises
