the captical allowances

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Our Latest Publications

Our Latest Publications

Capital Allowances: Transactions and Planning 2014/15

RICS Black Book Guidance Note

Other Books and Press Articles
Publications from The Capital Allowances Partnership Limited

Our Publications

Books

Press Articles

Services for Professionals

Working with Accountants

As we only advise on capital allowances and other property tax reliefs and do not audit accounts or look to provide tax compliance or general advice, all of our clients have their own auditor or tax agent who deals with all other tax matters.

We have worked with many accountancy firms, from individual practitioners up to top ten firms and are highly experienced at supporting other firms in this way. We like to work with accountants, rather than against them.

However, because we are specialists we have a different skill-set and are told we have a more in depth and up-to-date understanding of capital allowances law and practice than most accountants, who deal with capital allowances for substantial property expenditure less frequently than us. Many accountants have told us they do not feel entirely comfortable advising on capital allowances for property acquisitions and construction projects and so are professionally obliged to involve an appropriate specialist.

Capital allowances law is particularly complicated when second-hand property is purchased. Accountants can find it difficult to advise fully because calculating the capital allowances claim requires an apportionment of the price between land, buildings and qualifying assets. This is a surveying-based tax valuation exercise which is outside most accountants' skill-set and expertise.

We have also found that accountants can sometimes find it difficult to maximise capital allowances for new-build, extension or fitting-out/refurbishment projects. This is because they do not have the necessary background in construction technology and costing of assets that qualify for tax relief. And this is especially so where construction cost records are limited in scope or complicated (eg, 'design & build' or 'construction management' or 'direct labour' contracts), or for larger and more complex expenditure projects.

Services for Other Professionals

Claiming capital allowances can generate significant valuable tax savings for commercial property expenditure.

Capital allowances are a type of UK tax relief for money spent building or buying commercial property. They have a long pedigree, having been with us in one form or another since the late 1800s.

Who can Claim?

Capital allowances are available to commercial property:-

  • Owner-occupiers (ie, taxpayers' trade premises, including tenants), and
  • Investors (ie, landlords).

Importantly, the property owner must be:-

  • UK taxpaying (ie, not a non-taxpayer such as a SIPP, charity or trust) and making sufficient business or rental profits to have paid, or be expected to pay, an income or corporation tax bill, and
  • Not a builder, trader-developer or property trader or (ie, businesses for whom the expenditure would normally be incurred on 'trading account').

It generally does not matter whether the property is owned outright (ie, the interest held is freehold) or the property is leased. However, the rules can be more complicated for leases.

Claiming

All commercial premises contain 'plant and machinery' (as defined for tax purposes). These include fixtures such as electrical, water, heating and sanitary systems, and many other assets. When valued correctly, the money spent on these assets may be written-off for tax purposes, sheltering the owner's business or rental profits from taxation.

Particularly plant-rich properties include: offices; pubs; hotels; restaurants; nightclubs; care homes; doctors', dentists' and vets' surgeries; private hospitals; motor dealers and petrol stations etc. However, generally, capital allowances claims are not possible for residential properties (with a few exceptions).

Claims are possible for the purchase of second-hand property as well as building works, such as new-builds, extensions and refurbishments.

  • The tax savings are typically between 5% and 10% (and as much as 25%) of the money spent to build or buy the property (depending upon the property type and the owner's tax rate).
  • Claiming can result in a cash rebate from HM Revenue & Customs, or a reduction in current and future tax bills, or both.
  • There is no time bar on claiming for money spent to buy or build property before April 2012. However, from April 2012 new rules apply to sales and purchases of second-hand property. These impose a broadly two-year time limit upon buyers where the seller has previously claimed capital allowances. The rules will be tightened from April 2014 to apply even where the seller has not claimed any allowances, but could have done.

Claiming capital allowances is a right not a privilege. As long as the taxpayer has spent money on the right types of assets (ie, 'plant and machinery'), a claim should be possible. This is not controversial (ie, capital allowances are not a tax 'scheme'). In essence, making a claim is simply good practice tax "housekeeping", making the most of business tax relief put in place by successive Governments.

However, capital allowances, particularly on property acquisitions, are often unclaimed or underclaimed because of the practical difficulty in identifying and valuing these valuable tax assets. It is estimated that perhaps more than 90% of capital allowances are not fully claimed.

Other Advisers

There are a number of firms that market capital allowances services, ranging from surveyors through to specialist firms, but like all professional advisers they vary in suitability.

As specialists we have a different skill-set and more in depth and up-to-date understanding than general advisers. Also, recently many 'newcomers' have started marketing specialist capital allowances services, in our experience often making statements about their track records and results that should be treated with caution. Advisers with our capital allowances expertise and experience are rare.

Capital allowances law is particularly complicated when second-hand property is purchased. Accountants are normally unable to advise fully because calculating the claim requires an apportionment of the price between land, buildings and qualifying assets, which is a surveying-based tax valuation exercise which is outside most accountants' skill-set and expertise. And, most surveyors do not have the requisite tax knowledge.

Fortunately, capital allowances claims are ideally suited to being dealt with on a stand-alone basis separately to other tax matters and we work alongside other advisers without any conflicts of interest or scope overlap issues occurring.

Our Fees

Our fees are always tailored to the client's needs, agreed in advance and for expensive property expenditure can be flexible.

Depending upon the owner's preference, we can either charge a fixed fee, or a results fee based on the value we deliver. The process is precisely the same, regardless of the fee type chosen. For results-based fees our work is, in effect, 'no win, no fee' and our client is guaranteed to always keep the lion's share of any tax savings generated. Also, our fees are tax-deductible in their own right.

There is no downside in involving us because we will normally carry out a free of charge and no obligation initial review to assess the feasibility of claiming, estimate the tax savings that should arise, and propose an appropriately tailored fee.

Our Approach

We strongly encourage other professionals to consider referring us to their clients and contacts. There is no downside in involving us because we will normally carry out a free-of-charge and no obligation initial review to assess the feasibility of claiming, estimate the tax savings that should arise, and propose an appropriately tailored fee. We will provide all of the support needed to market the opportunity and there is absolutely no need for you to become involved in any of the technical details (unless you wish to do so). Our standard conditions and terms of business are provided with our engagement letter.

Please contact one of our directors for more information.

Send us a Message...

Give us a Call...

London and the East Midlands:-

Martin Wilson

Telephone: 0116 241 4148

Mobile: 07799 473 562

West Midlands, South West & Wales:-

Adam Garrad

Telephone: 0121 354 1338

Mobile: 07799 473 561

The East and South East:-

Steven Bone

Telephone: 01353 675 224

Mobile: 07880 711 368

The North, Scotland and Ireland:-

Steven Burchill

Telephone: 01506 811 561

Mobile: 07799 473 566

Our Latest Publications

Our Latest Publications

Capital Allowances: Transactions and Planning 2014/15

RICS Black Book Guidance Note

Other Books and Press Articles
Publications from The Capital Allowances Partnership Limited

Our Publications

Books

Press Articles