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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

Capital Allowances can provide tax paying companies, individuals and investors (including overseas), with a significant investment gain by reducing the amount of tax payable against income.  In this article we set out the basic requirements that must be satisfied to secure this valuable tax relief when buying property.

For the buyer to take the benefit of claiming any unclaimed Capital Allowances, there are two key requirements that must now be addressed for the purchaser to have entitlement to claim Capital Allowances.

Firstly, the onus is now on the buyer to establish the level of claim available and to then agree a fixed value to which the buyer and seller agree to elect across on completion of the transaction.  The second is that the seller must reflect that elected value by simply pooling the allowances in their next tax return.

The ability to address the first requirement is the harder of the two, as this requires the buyer ascertaining from the seller to what extent, if any, have Capital Allowance claims been made.  Unfortunately, there is no readily available database of values to extract this information from, rather it relies on the due diligence undertaken by the buyer and their advisors.

However, knowing the tax paying nature of the vendor may give rise to a clearer path, whereby if the seller is non-tax paying, such as a pension fund or government body, then providing a statement of no claim is obtained, it removes the need to agree a value.  Rather it enables the buyer to claim on the seller’s expenditure and to look at any past owner’s expenditure.

The wording adopted in the heads of terms, replies to CPSE enquiries and sale contract wording dictates the legal position to determine the buyer’s eligibility to claim Capital Allowances.  Clients have missed out on claims having assumed that the matter had been dealt with, only to find there was insufficient or no legal provision on Capital Allowances, which is frustrating, when a simple challenge would have averted this loss of benefit.

Here at Veritas Advisory we can provide clients with a very quick comment or draft clauses, which will ensure that the purchaser can make a claim post completion.  It is worth highlighting that calculating the quantum of claim is not required at the time of completion, as there is a two year time frame in which to submit an election to HMRC.

Since a rule change in 2014, the strategy of picking up the Capital Allowances until after the deal is completed, is no longer an advisable strategy and can often give rise to clients missing out where they find they have agreed to a seller’s protective clause.  Or if the sale contract is silent, then being reliant on the seller’s goodwill after the deals completion, may be in short supply.

It is however worth pointing out that all is not lost, as even if the sale contract is silent or the buyer’s lawyers are told that there are no allowances available to the buyer, this does not remove the ability for the buyer to make a claim for Capital Allowances.  For example, if the buyer is the first to have entitlement to claim on qualifying fixtures after April 2008, then there will always be a claim based on the introduction of newly qualifying assets under the integral feature rules.

At Veritas Advisory we offer a due diligence service which raises enquiries of past owners on the buyer’s behalf, to assess their entitlement to past claims and in most cases with success.  For most properties, they have undergone many refurbishments over time and this expenditure will often not have been fully claimed against, which can give rise to new claims for our clients.

Should you wish to understand more about our due diligence service on buying property, then please contact one of our directors.