For many occupiers, whether as an owner or as a tenant, the issue of capital allowances on their property expenditure is often left for their accountant to resolve. Unfortunately most accountants are usually consulted only after the expenditure has been incurred or terms for a property purchase have been agreed rather than at pre-contract stage, which can leave the taxpayer exposed.
Additionally, as accountants are not trained in property and construction issues, they will often need the help of a specialist with the necessary experience and expertise to provide a comprehensive service on capital allowances.
When a new occupational lease is entered into, the tenant will often want to undertake fitting out works or lterations to suit their particular requirements. When the tenant does not own the property in which these works are undertaken, the fixtures legislation within the Capital Allowances Act still allows that tenant to make a claim for capital allowances upon any qualifying works it undertakes.
If a property is purchased rather than leased, then changes that came into effect in April 2014 mean capital allowances must be investigated fully prior to exchange of contract otherwise any capital allowances available could be lost.
Our many years of experience in advising property occupiers means we are ideally positioned to ensure occupiers interests are fully protected and the highest level of capital allowances achieved.
More detail on the areas we can advise on are set out below
Establishing the scope for CA’s taking into account the past history of claims made on the property.
Ensuring that CA’s 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 CA’s are properly passed on to the purchaser.
Carrying out s562 apportionment of the total consideration, which is often more than just the purchase price, in accordance with statute, HMRC guidelines and VOA practice.
Ensuring that CA claims are maximised by the seller – either for retention or to pass onto 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.
Prepare the CAA 2001 s198 election to pass on the CA’s to the purchaser.
Drafting of clauses in the purchase agreement to ensure compliance with the provisions of CAA 2001 s187A and so that the CA’s are properly passed on to the purchaser.
Correct allocation of qualifying expenditure to the appropriate pool so that it attracts the highest possible claim rate. This includes for example maximising the potential to claim Enhanced Capital Allowances on energy efficient or water saving technologies.
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, to capture any incidental expenditure, such as lift shafts, that is allowable under CAA 2001 s25 making sure all items claimed are in accordance with case law and current HMRC guidelines.
Ensuring that any CA’s due on any fit-out works are vested in the intended party.
Analysis of the final fit-out costs to ensure the value of any CA’s available within these works are optimised between both parties.
Provision of strategic advice on the potential tax benefits of making a claim for BPRA’s taking into account your 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 CA – this is particularly relevant following recent changes brought in by Finance Act 2014.
Undertaking a technical due diligence review of any previous BPRA claims produced by another party and on which HMRC may have raised an enquiry into.
For more information on any of the above issues or for an initial
consultation free of charge or obligation, please do give us a call on 03300 889 668.