Consequently, to create the right atmosphere for customers it has spent considerable amounts on the exterior and interior décor of the building and also on staff development and training.
It is important to highlight the fact that there are risks associated with this strategy; but on a more positive note it is possible to mitigate the financial exposure through obtaining tax relief on the expenditure.
When assessing the tax implications of such a building project the following questions should be asked:
- What proportion of the work carried out will attract capital allowances and how much would be classified as revenue expenditure?
- Can we estimate how much of a major refurbishment may obtain capital allowances —if not should we involve a capital allowance valuer?
- Will the work be complete at the year-end — if not how will we estimate what work has been carried out?
- At what rate will we receive tax allowances?
Revenue repair and refurbishment costs are directly relievable against the company's profits — tax relief therefore being given at the applicable tax rate. This is therefore the preferred tax treatment.
Alternatively, if capital allowances are available (eg on the new scissor jacks, and even lighting if for the purposes of creating a sales setting), many owner-managed businesses will attract 40% allowances in the first year where the business is classified as a small or medium-sized company — otherwise these are restricted to 25 per cent per annum. These allowances are given at the prevailing tax rate.
Like many thriving businesses, Monorep knows that staff development and retention is equally important to the success and long-term growth of a business. The good news is that tax relief will be given for training costs and no liability will fall on the individual.
And finally, I'd like to remind the group that the use of approved share schemes can be a tax efficient way of promoting loyalty to a company and help in retaining qualified and motivated staff.

- Chris Hurren is a partner in the Motor Group at Baker Tilly in Guildford — for further motor sector advice, please contact him on 01483 307000.