We have worked with many accountants and tax advisors for over 20 years and really do appreciate the challenges that capital allowances issues on property can often present, especially if information is poor or time pressures are great.
Similarly, these professionals have recognised our expertise and ability to guide them smoothly through the capital allowances valuation and claim process, allowing them to focus on their core fee earning activities.
Following various rewrites, continuous changes in Treasury policy and numerous amendments introduced by subsequent Finance Acts since the last consolidation back in 2001. We took part in all the HMRC consultations on these changes and have a thorough understanding of the background to the current rules, how they have been developed and how they work in practice. This, coupled with our in-depth knowledge of property and construction, means we are expertly qualified and uniquely placed to provide the bespoke support you and your clients require for any specific situation or on any specific property.
There is much more to preparing a capital allowances valuation than simply preparing a tick list of qualifying items and using the mysterious HMRC approved ‘matrices’ that some of the recently formed consultants refer to. There are no such matrices and it is not acceptable to simply guess the value of a CA claim.
This is particularly important to remember under the UK’s self-assessment regime where regardless of who or how a claim has been prepared, the Client is confirming to HMRC it has been correctly prepared. The Client is potentially therefore exposed to the risk of penalties and wider investigations into their tax affairs if the claim is subsequently found to be erroneous or technically deficient.
Whilst we are able to assist retrospectively we much prefer to be involved from the outset, recognising the added benefits and improved outcomes pro-active planning can produce when compared with reactive reporting.
Early review of a proposed project to ensure all the Capital Allowances issues are considered from the outset and the highest claim value and tax benefits are achieved. This includes for example reviewing the proposed services installations to highlight the potential to claim Enhanced Capital Allowances on energy efficient or water saving technologies.
Detailed analysis of the project expenditure will ensure your clients achieve their full entitlement to capital allowances. We are able to do this even in cases where there is very little detailed information on the building costs available.
We will ensure correct allocation of qualifying expenditure to the appropriate pool so that it attracts the highest possible claim rate. We will also identify whether other forms of tax relief, such as Land Remediation Relief (LRR) might also be available.
Ensuring that the expenditure is categorised properly between revenue and capital, where appropriate, so that the immediate tax benefit is maximised. At the same time we would consider the availability of any initial or enhanced first year allowance relevant at that time.
Using our construction knowledge, in conjunction with our detailed understanding of the how particular sections of The Act are targeted at specific types of expenditure. This will help capture any incidental expenditure, such as lift shafts, that might be allowable under CAA 2001 s25 making sure all items claimed are in accordance with case law and current HMRC guidelines.
We are also able to identify whether other forms of tax relief, such as Land Remediation Relief (LRR) might also be available.
There are many properties on which capital allowances have not yet been fully claimed or claimed at all. It may still be possible to make a claim on these properties even if the expenditure was incurred many years ago.
Under rules introduced from April 2014, the seller must now pool any qualifying expenditure before disposing of a property – otherwise the allowances could be lost forever. It is, therefore, often best practice to prepare a valuation on any qualifying expenditure as soon as possible while there is a greater chance of collating the supporting information.
Ensuring that capital allowance claims are maximised by the seller – either for retention or to pass on to the purchaser.
Ensuring that CA’s are dealt with effectively in the heads of terms, in accordance with the agreed wishes of the parties.
Help draft the replies to CPSE’s.
Drafting of clauses in the purchase agreement to ensure compliance with the provisions of CAA 2001 s187A and so that the capital allowances are properly passed on to the purchaser.
Prepare the s198 election to pass on the capital allowances to the purchaser at the agreed value.
Identification of any proposed expenditure and whether it falls within the current rules that would enable a claim for BPRA’s to be made.
Provision of strategic advice on the potential tax benefits of making a claim for BPRA’s taking into account the taxpayer’s longer term plans for the property in question.
Apportioning expenditure between any works that could attract BPRA’s and those works, which for any reason might not, but which could attract some other form of relief or capital allowance – this is particularly relevant following recent changes brought in by the Finance Act 2014.
Undertaking a technical due diligence review of any previous BPRA claims produced by another party that HMRC may have raised an enquiry into.
Establishing the scope for capital allowances, taking into account the past history of claims made on the property.
Ensuring that capital allowances are given the appropriate priority in the heads of terms.
Interpreting and advising on seller’s replies to CPSE’s. This would include drafting supplementary questions where necessary.
Drafting of clauses in the purchase agreement to ensure compliance with the provisions of CAA2001 s187A and any capital allowances are properly passed on to the purchaser.
Negotiating s198 values and allocation of expenditure between the two pools which can often produce added tax benefits.
Carrying out s562 apportionment of the total consideration for any assets on which no prior claim has been made, in accordance with statute, HMRC guidelines and VOA practice. This total consideration can often be more than just the purchase price.
Modelling which type of lease incentive is most appropriate in any given set of circumstances.
Ensuring that any capital allowances due on any fit-out works are vested in the intended party.
Analyse the fit-out costs to ensure that the value of any capital allowances available within these works are maximised, whilst also ensuring that the capital allowances are allocated between the parties in the optimum way.
We can carry out an independent desk top audit of capital allowance valuations or analyses prepared by you or third parties. This could highlight areas of risk or possibly areas where the claim value could be enhanced. Either way, it will give you added peace of mind.
We have over 20 years of experience in negotiating capital allowances claims with HMRC and also with the Valuation Office, with a reputation for handling complex or technically challenging cases.
Ensuring that entitlement to capital allowances will be placed with the intended party when planning ownership structures.
For more information on any of the above or if you like to speak with one of our directors, for an initial no-obligation discussion, please call us on 03300 889 668
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