Capital Allowances - FAQs

What if I don’t deal with this on a purchase?

If capital allowances are not dealt with broadly within two years of the transaction date then the ability to claim is lost for the purchaser and any future owner.

How will the new rules affect claiming capital allowances?

Impact from April 2012 where no previous claim made
In situations where a capital allowance claim has not been made on the property, providing that the purchase took place before April 2012, the changes in legislation will not have any impact.

Impact from April 2012 where a claim has been made previously
For property sales taking place after April 2012 on which a capital allowance claim has previously been made, the new legislation requires the buyer and seller to enter into a mandatory section 198 election which agrees how the capital allowances are distributed. Advice should be sought if this applies to you, as failure to enter into the election will affect all future claims on that property.

Impact from April 2014
From April 2014, if it is ascertained that the seller could have made a claim for capital allowances (regardless of whether or not a claim was made), all qualifying expenditure must be pooled to enable future owners to make potential claims. If you are considering selling a commercial property after this date and have not looked at the capital allowance position previously, then this should be looked at sooner rather than later, as a failure to pool the expenditure will affect all future claims on that property and may also impact on its marketability.

What are capital allowances?

Capital allowances are a valuable form of tax relief available where a person incurs capital expenditure, usually through buying, refurbishing or building a commercial property.

In effect, this gives tax allowances on certain elements of the building, potentially including but not limited to kitchens, heating installations, sanitary systems, hot water systems, fire alarms, air conditioning, lifts etc.

Will my accountant not already have dealt with this?

In the majority of cases, most business / property owners assume that their accountant has already claimed capital allowances. This is a common misconception.

Whilst many accountants do provide capital allowances advice, many firms of accountants will not have the required surveyor's skill set in order to submit a comprehensive claim. We are confident that we will be able to identify additional items of qualifying expenditure resulting in a tax saving. BDO / Roger Hannah & Co would work alongside your advisors without any conflict of interest to attain the best result for you.

My accountant assures me that everything has been claimed. Why do I need to contact you?

We are not looking to undermine your accountant but there is a reasonable prospect that we can identify areas which your accountant will not have claimed for you and you could potentially be missing out on large capital allowances claims.

Due to the complex legislation, if your accountant has not undertaken a detailed survey of your property, it is more than likely that all the allowances will not have been claimed. Your accountant would also not look at retrospective claims on property bought prior to their appointment.

I bought my property a number of years ago, is it still possible to claim?

Yes. A capital allowances claim can be submitted retrospectively for all properties purchased prior to April 2012.  The rules have however changed from April 2012 onwards and we would advise that advice be sought prior to any purchase/sale.

Will a claim affect my Capital Gains Tax?

No. Claiming capital allowances will have no bearing on your Capital Gains Tax liability nor can you be taxed on a tax refund.

What is HMRC's perspective and what if HMRC don't accept my claim?

Capital allowances are a genuine tax legislation which has been available since 1949. Whilst many people have not heard of this, capital allowances are a right and not a loophole.

What if I do not have taxable profits? Is it still worth pursuing capital allowances?

Yes. We would always advise that capital allowances qualifying expenditure should be identified at the earliest opportunity. This is also particularly relevant with the impending legislation changes which could result in capital allowances on the purchase of a property being lost forever if they are not quantified and agreed at the point of sale.

Furthermore, when you become profitable and you have used all your tax losses which have been carried forward then the capital allowances will be particularly useful.

I am about to sell my property, will I lose my capital allowances?

Not necessarily. There are ways to make sure that you do not lose your capital allowances entitlement upon the sale of your property but it is vital that you obtain specialist advice before the sale takes place. We can assist you and advise you on how to protect your position.

Are there any upfront fees?

There are no upfront fees or hidden costs. Our work is done on a 'no win, no fee' basis. If we successfully identify capital allowances then a fee will be due. If we do not, then no fee will be due, it's as simple as that.

How long will it take to identify if capital allowances can be claimed and when will a claim be submitted?

A lot will depend on how quickly we can obtain the information we need from your accountant, your solicitor and yourself. Once we have the information then it is a quick process to be able to confirm if capital allowances can be claimed. A survey can then be arranged and a detailed claim submitted to HMRC.

Will I have to do much work as I do not have the time?

No. Very little work will be required by you. All we need is some basic information after which we will speak to your accountant and solicitor if required. Our aim is to take all the work off you.

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