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Case Law – Mersey Docks & Harbour Company v HMRC

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

14 Jan 2025

Written by: Clive Curd

Case Law – Changi Airport Loses $273m Tax Break

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

20 Dec 2024

Written by: Tom Lo

Furnished Holiday Lets – HMRC Clarify Legislation

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

07 Nov 2024

Written by: David Gibson

Archive

 

Latest News

Case Law – Mersey Docks & Harbour Company v HMRC

14 Jan 2025

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

Case Law – Changi Airport Loses $273m Tax Break

20 Dec 2024

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

Furnished Holiday Lets – HMRC Clarify Legislation

07 Nov 2024

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

New Case Law – Capital v Revenue

04 Oct 2024

A recent important Supreme Court decision in Centrica Overseas Holdings Limited v HMRC addresses the deductibility of expenses incurred by a company. The bar to deduct costs has been raised considerably

HMRC To Increase Scrutiny on Capital Allowances Claims

04 Oct 2024

Not only are Allowances more advantageous than ever before, but HMRC are strategically targeting tax leakage – including through Capital Allowances. Getting the correct advice is essential

100% Full Expensing – What is it and why it’s important

09 Sep 2024

Hailed as the “Greatest Tax Break in History” when it was introduced in 2021, the 130% Super Deduction aimed to take some of the sting away from the hike in Corporation Tax rate that was announced in the same speech. Its replacement, Full Expensing (FE), took over in April 2023 as a slightly less headline-grabby 100% First Year Allowance. But what is it?

Some Good News for Furnished Holiday Let Owners

05 Aug 2024

Positive transitional rules have now been published allowing Furnished Holiday Let owners the ability to use Capital Allowances beyond April 2025

Case Ruling – HMRC v Altrad Services Limited

10 Jul 2024

The decision by the Court of Appeal will have far reaching implications in that it clearly resets the boundaries of what is a capital allowances avoidance scheme designed to increase the quantum of capital allowances claimed

Spring Budget Update

06 Mar 2024

Chancellor Jeremey Hunt announces changes to the capital allowances legislation affecting furnished holiday let owners

Abstracting an additional benefit on sale can often be overlooked when it comes to marketing on any unclaimed Capital Allowances.  Here we set out the circumstances when this should be considered and how to go about it.

The position adopted for Capital Allowances on the sale of a property is largely dependent upon the extent that the entity can claim itself.  For non-tax paying entities such as developers who hold the property as trading stock or pension companies and who cannot claim, they are able to market on the benefit of any unclaimed Capital Allowances at the point of sale.

For a company, individual or investor they have a choice, which revolves around whether they are better off retaining the unclaimed benefit or to market it onto a buyer.  It should be noted that even where no prior claim has been made, then there is still the ability to submit a claim with an amended tax return before completing on the deal.

The structure of the holding entity can also dictate the best strategy to adopt.  For an entity or individual which will still have an alternate income post sale of the property, then the legislation provides the ability to elect to retain the unclaimed allowances, by entering into a section 198 election with the buyer within 2 years of completion.

As a side note, it is one thing making adequate contract provision to enter into a section 198 election, but if an executed version is not submitted within 2 years, then you could face clawback of the relief or being found in breach of contract.  The task of submitting the election all too often falls between the lawyer, accountant and client, so knowing who is responsible for this task is critical.

Conversely, if the property is held within an SPV, then with no future income it would often be beneficial to pass on any unclaimed Capital Allowances.  This ideally should be raised within the heads of terms, in order that a value can be extracted on sale and whilst there is no direct correlation to achieving a higher sale price, by bringing it to the table, it will always help with negotiating the best deal.

With new rules introduced in 2014, the unclaimed Capital Allowances needs not only consider the sellers own expenditure in terms of entitlement to claim, but also that of past owners.  Sellers can often make claims on a previous owner’s past expenditure, whether that be an acquisition or refurbishment.  Any such unclaimed allowances should be identified and either claimed, marketed across or a combination of the two.

Veritas Advisory offers a service to prepare market sheets to quantify unclaimed Capital Allowances for heads of terms.  Please contact one of our directors should this service be of interest.