A capital allowances claim for the purchase of fixtures was not determined by the allocation of the acquisition costs in the agreement between the parties but on a ‘just and reasonable’ basis subject to a cap by reference to the expenditure incurred by the vendor on those assets.  

In March 2005, a residential care home business (KCH) purchased a freehold property. The total amount of capital costs on fixtures claimed by KCH in its returns for capital allowances purposes in relation to the property, up to and including 28 February 2009, was £238,912. In the accounting period ended 28 February 2010, the residual value of KCH’s main pool was £85,504. In or around February 2010, KCH went into administration; no capital allowances were claimed by KCH in the accounting period ended 28 February 2011.

In May 2011, the appellant company purchased the