It’s nice to think that everything in tax is black and white. As this recent questioner says of two accountants’ advice over a garden office, “But surely they can't both be correct. Either it's an allowable expense, or it's not.” It’s genuinely not always as straightforward as that, though. Our UK system is essentially principles-based, not rules-based. Many things will be clear from the legislation, but some will not. When something isn’t clear, some dispute between taxpayer and HMRC will eventually reach the courts, and then we might get a precedent, indicating the appropriate treatment. But there’ll then be some other situation that’s similar-but-not-quite-the-same and the thing starts again. Sometimes there’s no 100% correct answer, and both accountant and client have to weigh up the evidence and decide how comfortable they are with an approach.
The recent Acorn Venture Ltd case is a good example. The taxpayer provided adventure holidays. They housed kids in basic camping pods, and teachers in slightly less basic camping pods - the latter were plumbed in and had toilets.
The tax treatment of those things depends on what they are - broadly, were they moveable plant or were they buildings? A taxpayer would like them all to be plant. HMRC would like them to all be buildings. In the end it was a draw - the kids’ pods were plant, the teachers’ pods (not moveable because they were fixed to the plumbing infrastructure) were buildings.
Some cautious accountants might have advised that they were all buildings, with a minimal tax deduction. Some more gung-ho ones might have advised they should all be claimed as plant, with a much more generous deduction (of course, so might some accountants who were not technically aware enough to even realise there was an issue to consider in the first place). A cautious client might have decided not to claim, a less risk-averse one might have been happy to go ahead. The outcome of the case doesn’t in itself mean that an accountant who recommended a claim for the teacher pods would have been “wrong” in some objective way, as long as they explained the grey area to their client, the factors pointing in each direction, and the risks of HMRC looking at a contentious claim. In fact, we need those accountants in order to get to the interesting and useful verdicts!
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