The amended fixtures rules, introduced in April 2014, have dramatically changed the way that capital allowances are dealt with on the sale and purchase of commercial property.

Liaising with solicitors

The responsibility now rests with solicitors to make sure that questions on capital allowances are addressed before exchange and that contracts are worded to reflect the agreed wishes of the parties.

It is certainly not possible to ignore capital allowances as this will most likely result in loss of tax relief to one or both parties. The difficulty is that while solicitors are viewed by their clients as being responsible for the contract documents and for completing the CPSE forms the solicitor may not be aware of the tax positions of the parties, nor the capital allowance history of the property. In order to comply properly with the new rules, the solicitor will often require assistance from their Client’s accountant and perhaps a capital allowances specialist.

We have been providing help in this area for over 20 years, liaising with solicitors, surveyors and accountants throughout the acquisition process. We ensure the parties are able to make decisions on capital allowances on a fully informed basis and that their optimum value is realised. This means you can confidently pass us your ‘capital allowances headache’ to us while you concentrate on the remainder of the transaction.

Areas we assist in:

Ensuring that entitlement to CA’s will be placed with the intended party when planning ownership structures.

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 s187A and any CA’s are properly passed on to the purchaser.

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.

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 s198 election to pass on the CA’s to the purchaser at the agreed value.

Modelling which type of lease incentive is most appropriate in any given set of circumstances.

Ensuring that CA’s due on any fit-out works are vested in the intended party.

Analyse the fit-out costs to ensure that the value of any CA’s available within these works are maximised, whilst also ensuring that the CA’s are allocated between the parties in the optimum way.