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Capital v Revenue – Understand The Risks v Benefit

As we are fast approaching the self assessment filing deadline for individuals and the amendment window for corporate entities with a year end of March, understanding the importance of what constitutes capital or revenue expenditure, and the risks and benefits associated with it, is extremely important.

24 Jan 2024

Written by:

First Year Allowances for Corporate Members of Partnerships

In a positive move HMRC have updated their capital allowances guidance for partnerships stating that partnerships with underlying corporate partners can claim first year allowances

19 Jan 2024

Written by: Abu Choudhury

Substantial Unclaimed Capital Allowances On Existing Assets

Capital Allowances provide an opportunity to save substantial amounts of money in a lean market yet many property owners and occupiers are already sitting on vast savings without even knowing it.

23 Oct 2023

Written by: David Gibson

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Latest News

Capital v Revenue – Understand The Risks v Benefit

24 Jan 2024

As we are fast approaching the self assessment filing deadline for individuals and the amendment window for corporate entities with a year end of March, understanding the importance of what constitutes capital or revenue expenditure, and the risks and benefits associated with it, is extremely important.

First Year Allowances for Corporate Members of Partnerships

19 Jan 2024

In a positive move HMRC have updated their capital allowances guidance for partnerships stating that partnerships with underlying corporate partners can claim first year allowances

Substantial Unclaimed Capital Allowances On Existing Assets

23 Oct 2023

Capital Allowances provide an opportunity to save substantial amounts of money in a lean market yet many property owners and occupiers are already sitting on vast savings without even knowing it.

The Risk to Lawyers of Not Correctly Addressing Capital Allowances

23 Oct 2023

Solicitors acting for clients on a purchase or disposal of a commercial property must ensure they correctly address capital allowances; failure to do so may give rise to reputational and / or financial risk.

Maximising Capital Allowances and Avoiding Pitfalls Through Timing

23 Oct 2023

The rules surrounding the transition between Super Deduction and Full Expensing can be complex and the importance of fully analysing and understanding any contract for construction or purchase is significant.

Use Capital Allowances to Help Pay for Higher Spec Offices

23 Oct 2023

On a typical £1m CAT B fit out the landlord or occupier, whoever is incurring the expenditure, could recover up to £250k by claiming Capital Allowances.

HMRC Capital Allowances Enquiries Focusing On Certain Sectors

26 Sep 2023

An increasing number of claims being submitted to HMRC are not fully compliant with the legislation, and in some cases are double what they should be, particularly in certain industry sectors.

Unearthing Hidden Treasures – LGT Wealth Article

01 Sep 2023

Veritas Director David Gibson was recently interviewed by Nicholas Duffy of LGT Wealth Management for thoughts on how family offices and property owners can identify Capital Allowances to help leverage other investments. Click here to read in full

Offset ESG Costs With Capital Allowances

09 Aug 2023

The impact of both ESG and MEES on the property sector is resulting in significant capital investments. To incentivise and reduce the net cost of capital investment, tax relief is available by way of capital allowances.

At the recent annual conference for NARA (The Association of Property & Fixed Charge Receivers), Veritas Advisory set out the impact of the Capital Allowance changes brought in last year and explained the actions required when buying through receivers.

The rule change introduced by HMRC last April, now means that on disposal if any unclaimed Capital Allowances are not quantified with an election and pooled by the vendor, then the value of Capital Allowances is nil.

This presents a particularly difficult challenge in the case of buying property from receivership, where information and cooperation maybe in short supply.

The need to quantify the available Capital Allowances on disposal now requires the purchaser to ask the vendor, and potentially past owners, about the history of expenditure on the property and any prior claims for Capital Allowances.  Whilst the relationship between the vendor and LPA Receiver can be awkward, by employing an independent Capital Allowances advisor it can help to open up the dialogue with the vendors and their advisors.

Once armed with the answers, it then drives the next steps.  In some scenarios it maybe that the quantum is insignificant and this allows both parties to move on in agreeing the terms of the deal.

Once a material quantum is established by the Capital Allowances advisor then there is the need to elect over the benefit.  In our experience of working on such deals, it has been possible to obtain the cooperation of the receiver via the vendor, as by having a signed election it removes any tax impact on the vendor.

At the conference it was widely acknowledged that Capital Allowances should be marketed on sale to assist the deal and to achieve best value.  If however, cooperation is in short supply, then to agree a value the purchaser has the option of making an application to the first tier tribunal for an independent ruling.

The purchaser must however ensure that the position is adequately covered off in the drafting of the sale agreement.  This is not to penalise the vendor in any way, but rather to provide the purchaser with the ability to go to tribunal if a signed election is not forthcoming.

This option is likely to become increasingly used to agree the value of Capital Allowances and with a disinterested vendor the purchaser should be in the box seat.  This ruling will override the requirement to seek the vendor to satisfy the fixed value and pooling requirement.

Whilst the need to deal with Capital Allowances can be viewed as being in the too difficult box, the cash rewards, if pursued, can be significant and should in most cases not be ignored.