Revenue Precedents

It is acceptable to reclassify as stocks rather than fixed assets linen used by companies providing a hiring and cleaning service in respect of linen. (2) Section 288 applies to the re Classification as if it were a sale at the open market price. CTF92/1005

Prior to 1973 a person could claim initial allowances and wear and tear allowances amounting to more than the cost of the plant and machinery. Section 11 Finance Act 1973 provided for the charging of the excess of the allowances over the actual cost. The question that arises is whether the actual cost is the cost as reduced by grants. At the time grants were not deducted in arriving at the qualifying expenditure for wear and tear purposes but were deducted for the purpose of a balancing charge. A strict application of the section could have had the effect of imposing a balancing charge on the excess of the allowances made over the expenditure incurred as reduced by grants. The Revenue Commissioners are prepared to accept that the provisions of Section 11 Finance Act 1973 (now section 288(5) Taxes Consolidation Act 1997) will not apply to this excess. The provision is only applied where the capital allowances granted exceed the gross cost. 00gm120