demolition of buildings on surplus sites

We have a number of surplus sites with buildings on them. We want to demolish the buildings to increase the development potential of the land. Are you able to fund the demolition costs from the capital receipt?
  • You're enhancing the value of the land so it meets the definition of capital expenditure so yes, it could be funded by capital receipts.
  • Agree with Neil, but would add that the demolition costs must be accounted for as capital spend funded from the capital receipt, not debited directly against the receipt. The approval of such spend would also need to go through whatever governance process you have to approve capital spend in general. (Apologies if this is obvious.)
  • [quote=John Everson;2749]Agree with Neil, but would add that the demolition costs must be accounted for as capital spend funded from the capital receipt, not debited directly against the receipt. The approval of such spend would also need to go through whatever governance process you have to approve capital spend in general. (Apologies if this is obvious.)

    Hi, has the demolition got to be funded from capital receipts? Is it because MRP would be linked to operational life so that would be nil? Thanks
  • If it's decided that the demolition is properly capital expenditure, it can be financed from any available source of capital financing - capital receipts, capital grants (subject to any conditions), borrowing or revenue - though the latter would somewhat defeat the point of capitalising in the first place.
  • [quote=John Everson;2759]If it's decided that the demolition is properly capital expenditure, it can be financed from any available source of capital financing - capital receipts, capital grants (subject to any conditions), borrowing or revenue - though the latter would somewhat defeat the point of capitalising in the first place.

    Thank you