In Steadfast Manufacturing & Storage Limited v HMRC TC7770, HMRC were unsuccessful in attempting to disallow the costs of resurfacing a yard as capital. The First Tier Tribunal (FTT) found there was no improvement and allowed the costs as a revenue deduction for repairs.

The FTT found that:

HMRC's reviewing officer noted in his review conclusion letter that, “I do not think, on the balance of probabilities, that the new surface does anything more than the previous surface did, except so far as it may not require repairs as often as before”.

The judge said that the reduced need for repairs does not of itself make the expenditure capital. In this case, it would be an inevitable result of repairing the yard properly, rather than in patches. In order to be capital, the reduced need for repairs would have to result from the bringing into existence of something new that had an enduring benefit to the business.


A novel line of argument from HMRC in that carrying out decent repairs will create an 'enduring advantage' for the taxpayer. The judge found that this is not supported by any case law. HMRC have not got a good track record when it comes to resurfacing, as the decisions in Hopegear Properties, Cairnsmill Caravan Park and G Pratt & Sons etc reveal (see Repairs & Renewals, subscriber guide)


Repairs & renewals
What expenses can you claim for tax? In what situations are repairs disallowed and treated as capital expenditure?

Plant & machinery
What expenditure qualifies for capital allowances?

Fixtures and integral features
What are the rules for property repairs and renewals?

External links

Steadfast Manufactuing & Storage Limited v HMRC TC7770