Reclaiming for Survey

Tax Planning and Financial

From an accounting point of view it surely has to be written off in the profit & loss account. It couldn't go to the balance sheet because no asset has resulted.

I suspect though that your question is more about tax rather than accountancy principles? What is clear, is that if you had gone ahead with the purchase, the survey costs, legal charges, stamp duty etc. would all be part of the capital cost with no tax deduction against rental income - but a deduction for capital gains tax if and when you sold the property at some point.

As far as I'm aware, the HMRC view (from case law) is that there's no tax deduction of any kind for costs in relation to a property purchase that falls through. Have a look at this from their website:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM35325.htm

No fairness in this because you will have spent the money to increase your rental income - but that seems to be the way it is until someone sucessfully challenges it.