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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 current Capital Allowances system comprises approximately 400 pages of legislation.  In addition, HMRC provide lengthy guidance manuals on how to interpret the legislation, supported by various case law.  In comparison the accounting rules for depreciation are a mere 11 paragraphs of guidance notes.

As the OTS report suggests, businesses should employ specialist capital allowances consultants to work out what does and what does not qualify. There are two main areas of complication; identification and property investment transactions.

To determine what items of expenditure to claim, a business must consider many factors, including that of its own specific trade and how it uses the item in question, what costs are associated with that item and splitting out costs, which are often aren’t comprehensive, to ensure the correct pool allocation.

Identification of machinery by accountants is straightforward.  However, complications arise in the category of land and buildings and leasehold improvements.

Expenditure on a building project comprises a contractor valuation of the works, elements including labour, plant and materials, and in addition there will be various professional fees, site set up costs and other directly incurred expenditure.

There is no definition of what plant is to help allocate this item for a relief and the information produced on a project is not a tax friendly list of items, set out for the calculation; indeed it is the opposite.

The process is further complicated with the acquisition and disposal of investment properties.  This is noted in the report as one area that stands out for attention.  Under FRS105 investment properties are revalued every year and are not depreciated.  The OTS stated this is a challenging problem for which it has not found a simple answer.

The current process for transferring Capital Allowances from a Seller to a Buyer on sale is by a mechanism known as a Section 198 election, and rules introduced in 2012 and 2014 only made the process of agreeing what value can be passed to a new owner even more complicated.

Without specialist advice Capital Allowances are often missed with a common mistaken assumption that they are not relevant on that particular transaction with no scope for further allowances to be identified and claimed.