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HMRC internal manual

Business Income Manual

Waste disposal: site preparation: capital expenditure

S165-S167 Income Tax (Trading and Other Income) Act 2005, S142-S144 Corporation Tax Act 2009

The decision in Rolfe v Wimpey Waste Management Ltd [1989] 62TC399 established that all expenditure on preparing a site for waste disposal was capital and thus precluded a deduction for such expenditure on trade profits principles (see BIM35000 onwards). There is, however, specific legislation which permits the deduction of an ‘allowable amount’ calculated by reference to site preparation expenditure which would not otherwise be allowable.

Its broad effect is to allow for any period of account an amount equivalent to so much of the total qualifying expenditure on a particular site as corresponds to the proportion of the total site capacity used up in that period. Relief will continue to be given over the life of the site until the total capacity is exhausted.

Note that there are special rules which are not covered in this guidance for expenditure incurred before 6 April 1989 on a site which is still in use.