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Veritas Blog for Harold Sharp Proptech

As part of our working relationship with Harold Sharp accountants we were recently requested to add an article on the new Structures and Buildings allowances for their Proptech initiative.

09 Dec 2019

Written by: Nolan Masters

Guidance on Structures & Buildings Allowance

It has taken HMRC a year since the Structure and Buildings Allowance (SBA) was announced in the November 2018 budget to publish the detailed guidance on its new tax give away for capital expenditure on all non-residential buildings.

09 Dec 2019

Written by: Clive Curd

New Case Law – HMOs and HMRC Enquiry Times

Another recent Case law ruling, Hora Tevfik v HMRC (2019) recently dismissed Capital Allowances claims on HMOs (Houses of Multiple Occupancy) plus also highlighted the ability of HMRC to make enquiries into claims beyond the normal time limits.

11 Nov 2019

Written by: Clive Curd

Archive

Latest News

Veritas Blog for Harold Sharp Proptech

09 Dec 2019

As part of our working relationship with Harold Sharp accountants we were recently requested to add an article on the new Structures and Buildings allowances for their Proptech initiative.

Guidance on Structures & Buildings Allowance

09 Dec 2019

It has taken HMRC a year since the Structure and Buildings Allowance (SBA) was announced in the November 2018 budget to publish the detailed guidance on its new tax give away for capital expenditure on all non-residential buildings.

New Case Law – HMOs and HMRC Enquiry Times

11 Nov 2019

Another recent Case law ruling, Hora Tevfik v HMRC (2019) recently dismissed Capital Allowances claims on HMOs (Houses of Multiple Occupancy) plus also highlighted the ability of HMRC to make enquiries into claims beyond the normal time limits.

Veritas Publish SBA Article in Taxation magazine

10 Jul 2019

In the latest edition of Taxation Magazine Veritas Director Clive Curd takes a practical look at how the new Structures and Buildings Allowances legislation works.

Success at the National Surveyor’s 7’s Rugby Tournament

17 May 2019

Congratulations to Jack Hooper of Veritas and his teammates from the Thirdway Barbarians team who won the recent National Surveyors 7's rugby tournament at Richmond

Veritas Become Member Firm of PAI Commercial Property Network

07 May 2019

Veritas are pleased to announce they have become a Member Firm of PAI Commercial Property Network, the UK's largest connected network of commercial surveying practices.

SBA Draft legislation Out

15 Apr 2019

HM Revenue & Customs have issued the draft legislation for the new Structures and Buildings Allowances legislation and have requested comments by April 24th before final drafting ready for issue later this year. Veritas Advisory will be responding.

New Case Law – £226m in Dispute!

05 Apr 2019

The First Tier Tribunal considered the capital allowance claim of a hydroelectric power generation scheme at Glendoe, in Scotland; the total construction cost was approximately £300m with HMRC accepting £34 million, leaving £226 million in dispute.

Veritas Advisory Appointed Capital Allowances Supplier to Carehome.co.uk

08 Mar 2019

Veritas are now a listed supplier to Carehome.co.uk as Capital Allowances advisor to maximise the tax reliefs on acquisitions, refurbishment and extensions of care homes.

It has taken HMRC a year since the Structures and Buildings Allowance (SBA) was announced in the November 2018 budget to publish the detailed guidance on its new tax give away for capital expenditure on all non-residential buildings, whether they are built from new, extended, tenant fit out, or refurbished.

The estimated cost to the Treasury, or put it another way, the amount the taxpayer can save in 2019-2020 is £165million, and HMRC will spend £17million to put their systems in order to cope with this change!

Is it worth it?
The tax relief is 2% of the qualifying expenditure leading some clients to question whether this tax allowance is worth the effort of making a claim?

Perhaps the response is do you want to pay less tax or potentially disrupt a future sale by not having the relevant information to hand to transfer to a Buyer? The allowance rate may only be 2% but on a £10m industrial development the allowance is worth about £350,000 in tax savings over ten years, not something to be sniffed at.

Additionally, because of the interaction between the SBA and capital gains on sale, it is now more important than ever to use a specialist with the appropriate skills to value and maximise the plant and machinery allowances thereby reducing potential future gains.

Guidance Note Explanations
The guidance notes have provided some further explanation on the following points:

  • An SBA allowances statement must be maintained but does not have to be routinely disclosed to HMRC. However, as demonstrated by the recent Hora Tevfik v HMRC case it is beneficial for the taxpayer to submit the statement to HMRC, otherwise there is a risk of enquiry beyond the normal time limits.
  • Where no construction contract exists, maybe because in-house, or an agreement, HMRC clarify that an email exchange would satisfy the evidence required
  • How to calculate the SBA figure where a project has both qualifying and non-qualifying use, or is constructed in multiple phases
  • Definition of residential us; although the SBA definition of residential is different to that used for plant and machinery allowances. So what evidence is required to substantiate a claim?

What evidence is required to substantiate a claim?
Unless the following is provided the SBA claim is NIL:

  • Evidence of construction expenditure incurred
  • Relevant documents to support the date of earliest construction contract
  • Calculations of their just and reasonable apportionment (where purchase price is the relevant expenditure)
  • Date of first use, for the purpose of an SBA claim

Definition of Residential
The definition of residential is defined, but perhaps has confused the definition compared to other allowances, namely plant and machinery.

  • Hotels qualify, but aparthotels do not
  • Care homes qualify for P&M, but old age, and self-contained without personal care do not
  • Furnished holiday letting qualify for P&M but not for SBA.
  • Residential common areas qualify for P&M, but not for SBA.
  • Structures in residential common areas qualify for P&M, but not for SBA.

Potential issues for the calculation
There are added complications in calculating the allowances, especially on multi-let properties undergoing refurbishment programmes and mixed use developments, but on all projects we envisage potential issues arising from ensuring that the basis of the calculation is correct and excluding from the calculation any of the following:

  • Certain architect fees
  • Planning fees
  • Expenditure which could qualify for land remediation relief
  • All expenditure that could qualify for plant and machinery and integral features
  • On costs to various packages including professional fees

The new SBA is a welcome relief and a valuable one particularly where properties are held over a number of years. For any queries on the legislation then contact one of the Veritas Directors.