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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 Capital Allowance legislation changed back in April 2014, when HMRC placed extra onus on the purchaser to address Capital Allowances before completion of the deal or risk losing out altogether.  Here we set out some key actions to avoid this scenario.

Veritas Advisory have advised on hundreds of property transactions and with the introduction of section 187A of the Capital Allowances Act 2001, it has brought increased risk for clients and their advisors when it comes to securing the best Capital Allowance position.

The greatest risk comes with the buying side and typically there are two scenarios that can often arise. The first is where the seller is unaware or has simply not addressed the historic Capital Allowances position, this will be evident by the fact that both the heads of terms and replies to CPSEs are silent or noted as TBA.  In this scenario, the onus is on the purchaser to drive the conversation on Capital Allowances or risk losing out.

It is preferable to get a Capital Allowance specialist advisor who can establish the likely quantum of claim available, which will then dictate next steps.  If it is found that the value of the claim is likely to be minimal, this too can be helpful to remove any potential delays to the deal.  Where a material benefit is found, then what is critical is to ensure that the sale contract makes for the legal provision for both parties to agree to enter a section 198 election to pass over any unclaimed Capital Allowances.  Without any such obligation, it will leave the buyer exposed to the risk of missing out and reliant on the goodwill of the seller to satisfy the fix value requirement.

In our experience, where the seller has not claimed nor is intending to, then providing the buyer meets the cost to quantify the allowances, they will agree to sign up to a section 198 election.

If the seller is switched on to Capital Allowances, then this gives rise to another set of risks to address.  If the seller is offering the value of £2.00 as an elected fixed value, then this will effectively remove any entitlement for the buyer on those qualifying fixtures which the seller had entitlement to claim.  Note that even where this is the case, then the buyer can still have entitlement to claim on certain fixtures which fall outside of the section 198 requirements, such as prior landlord tenant capital contributions and overage claims where the vendor didn’t have the entitlement.

Buyers should be aware that it can be only too easy to sign up to what the seller’s lawyers propose, which can sometimes be a protective position.  This however, can still be challenged as the value to which both parties agree to fix the value of Capital Allowances at is a commercial settlement and therefore down to negotiation by both parties as part of the agreed deal.  By having a Capital Allowances consultant on board at the time of the deal, it can help to lead such discussions rather than to rely on the acting lawyers to deliver the best position.

It is worth noting that if a fixed value cannot be obtained, then in some circumstances there is the option for either party to apply for an independent decision to be reached by writing to the first-tier tribunal service.  Veritas Advisory are one of the first practices to have been successful in agreeing such a claim.

For the seller, if they have historically claimed and are up to date with making these claims, then it is simply a case of agreeing to a fixed value on disposal.  If there are any unclaimed allowances or the inherited position is not known, then it is advisable to get a Capital Allowance consultant to determine the position so that the basic facts are known and will not lead to the deal being delayed.  It will also enable the seller to try to extract some further benefit on sale.

Veritas Advisory offer its clients a comprehensive Capital Allowance due diligence service where we sit alongside the legal teams to maximise available claims and reduce risk.  Should this service be of interest then please contact one of our directors.