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Capital Allowances Incentives to Increase?

In a positive move to encourage capital investment Rishi Sunak announced in the 2022 Spring Statement plans to expand the Capital Allowances legislation, subject to a consultation process, to be formally announced in the autumn budget and to take effect from April 2023

23 Mar 2022

Written by: David Gibson

Veritas Contribute to UKAA Publication – Improving Returns on Build to Rent

As a member of The UKAA, we were pleased to be invited to contribute to their latest buzz news issue, in which we explain how investors-operators of build to rent can improve investment returns by claiming capital allowances

02 Nov 2021

Written by: Nolan Masters

Veritas Confirmed New Member of UKAA – The Organisation for the UK Build to Rent

Veritas Advisory have now been confirmed as a new member of UKAA, the organisation for the UK Build to Rent sector. 

18 Oct 2021

Written by: David Gibson

Archive

 

Latest News

Capital Allowances Incentives to Increase?

23 Mar 2022

In a positive move to encourage capital investment Rishi Sunak announced in the 2022 Spring Statement plans to expand the Capital Allowances legislation, subject to a consultation process, to be formally announced in the autumn budget and to take effect from April 2023

Veritas Contribute to UKAA Publication – Improving Returns on Build to Rent

02 Nov 2021

As a member of The UKAA, we were pleased to be invited to contribute to their latest buzz news issue, in which we explain how investors-operators of build to rent can improve investment returns by claiming capital allowances

Veritas Confirmed New Member of UKAA – The Organisation for the UK Build to Rent

18 Oct 2021

Veritas Advisory have now been confirmed as a new member of UKAA, the organisation for the UK Build to Rent sector. 

Veritas Supporting Charitable Causes

01 Oct 2021

We have chosen to support four charitable causes reflecting activities that are close to us and to people we know and would like to raise awareness of.

Using Artificial Intelligence for Capital Allowances

27 Sep 2021

Can Artificial Intelligence help claim capital allowances? In addition to preparing detailed claim reports for clients, Veritas Advisory, in partnership with Brunel University and Innovate UK, are applying technology to solve some of the issues, the main one being how to use data efficiently and correctly.

New Case Law – Potato Store is Plant

07 Aug 2021

JRO Griffiths Limited v The Commissioners for Her Majesty’s Revenue and Customs [2021] UKFTT 257 (TC) resulted in the taxpayer winning their appeal in whether or not a warehouse used to store potatoes for a crisp manufacturer is plant.  The taxpayer won on 2 counts.

Estates Gazette Article – Capitalise on Allowances

20 Jul 2021

Veritas Advisory Director Nolan Masters, together with Alex Barnes a Partner at BDB Pitmans LLP, have published an article in Estates Gazette on how capital allowances claims can mitigate the increasing cost of tax on property investment.

New Case Law – Satellites

16 Jul 2021

A Capital Allowances case Inmarsat Global Limited and The Commissioners for Her Majesty’s Revenue and Customs UT/2019/0167 V), has been refused by the Upper Tier Tribunal, in relation to the launch of satellites.

Taxation Magazine Article – The New Super Deduction

04 Jul 2021

In the June edition of Taxation Magazine Veritas Advisory Director Nolan Masters set out how the new super deduction and special rate allowances will affect property owners, occupiers and investors. Click here to read the article in full

The introduction of new rules in April 2014, meant that for a Purchaser to secure Capital Allowances they had to enter into an election with the Seller within 2 years after completion.  From next month, any deals completed soon after this date are now fast approaching the deadline risking losing out on the tax relief altogether.

For example, if you had acquired a property in May 2014 and the Seller had not claimed Capital Allowances, in order for the Purchaser to make a claim they must obtain a signed election before May 2016 or lose the allowances.  It is worth remembering that this rule change risks causing not only a loss of tax relief for the Purchaser, it also will deny the opportunity for the Purchaser to abstract a benefit upon disposal.

Potential Loss                                  

So what is the potential loss in cash terms?  If we take our example of a purchase of say an office building in May 2014 for £10m, where the Seller acquired the property in 2007 and had inherited an s198 election for £1 on their purchase.  Then as part of an asset management initiative before sale the Seller refurbished all the office cores spending £2m in the process.  They then sell to our purchaser in May 2014, but did not get around to claiming Capital Allowances on the £2m refurbishment.  Under the new rules the Purchaser must get the Seller to enter into an election to pass the benefit of the unclaimed Capital Allowances or lose out.

This will require the Purchaser quantifying the unclaimed allowances on the Seller’s behalf, which based on a £2m refurbishment could be as much as £1.6m of allowances or £320,000 in cash terms, based on a 20% corporate or overseas income tax payer.

Goodwill

The ability to get the Seller to cooperate to sign up to an election may come down to relying on the goodwill of the Seller although if the purchase contract has been drafted robustly it will provide for a cooperation clause to allow for such an event.  In the case of buying through receivership or administration, often Capital Allowances are completely overlooked as being too difficult to pursue; however, there are options available and Veritas Advisory has recently been successful in securing significant allowances in such a scenario.  There is also the final option of going to First-Tier Tribunal, a course of action that we are likely to see grow as these new rules bed down.

If you are a client or have acted for a client who has purchased property, then please call one of our Directors who will provide a no fee review to assess the Capital Allowances position.