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HMRC internal manual

Business Income Manual

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Waste disposal: site restoration: capital/revenue

S168 Income Tax (Trading and Other Income) Act 2005, S145 Corporation Tax Act 2009

Restoration is not defined in the legislation and therefore takes its usual dictionary meaning of replacing, reconstructing or returning something to its original state.

A variety of different types of activity might be broadly described as restoration. The most obvious are covering the site with an impermeable layer, sub-soil and topsoil, contouring the site, drainage, seeding, tree planting and other similar activities intended to return the site to a condition in which it is suitable for an alternative use. Such work is normally carried out ‘once and for all’ and involves a physical alteration of the site. The cost of such work is capital expenditure which qualifies for the relief at BIM67420 in so far as it is not capable of relief by way of capital allowances (see BIM67430).

The term ‘restoration’ is also often used to describe activities such as the monitoring and treatment of leachate and gases. These activities begin during the period of waste disposal and will continue after waste disposal has ceased. We accept that the day to day cost of carrying out the actual monitoring and treatment activities is revenue expenditure whenever incurred and, as such, is outside the scope of the relief for capital expenditure. Expenditure on monitoring and related activities should be dealt with as ordinary revenue expenditure.

The capital costs of plant and machinery, to enable revenue monitoring and treatment activities to be undertaken, are also outside the scope of the relief for site restoration; capital allowances may be available for such expenditure.