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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

Glais House Care Limited v The Commissioners for Her Majesty’s Revenue & Customs

We were surprised by the content of this case, the relatively low values to take a case to Tribunal, and the error in entitlement, eligibility, apparent valuation methodology plus also the contract of sale which ignored the facts of the values involved. There is no mention of who prepared the claim, only that is was the accountant who instructed counsel for this client.

In summary, this is a case about the valuation of the allowances on the perceived simple acquisition of a care home. In addition to the claimant not recognising legislation restrictions on the value of the claim the vendor had also submitted a claim on items that were ineligible.  The result was a reduction in the claim from £318,792 to £254,602.

This case covers many aspects of the Capital Allowances legislation, but fundamentally is that to make a claim a tax payer must claim in accordance with the legislation.  However, it is complicated, and emphasises the point that specialist advice should be taken to reduce the risk of ending up in a lengthy and costly exercise in court, over what is a relatively small amount of benefit in the resulting decision.

There were errors in the claim preparation by both the vendor and purchaser, as well as in the sale contract.  First, that there was not enough due diligence during the acquisition to establish the vendors position, and that this should have been agreed and a CAA2001 S198 entered into the contract.  It also demonstrates that attaching a figure in a contract for “equipment” does not hold HMRC to agree to that figure, as in this case they did not.

The vendor made a claim for £220,454, including cold water, which they were not entitled to as the legislation specifically excluded this item.  “I would note cold water may have qualified if it was argued as an item of plant for the specific use of the trade”. The purchaser submitted a claim based on their purchase price for £318,792, less the equipment figures, but also included correctly “an overage” claim for cold water and electrics installation, being the first tax payer to incur expenditure after the introduction of integral features in 2008.  The issue is that you are often restricted to a previous claim and this was not considered.

A point was also made that the claim was calculated by valuing the fixtures and applying an index.  It was reported The Valuation Office Agency used a different basis, which we assume to be the recognized formula for an apportionment, and it just so happened to come out to the same figure.  If it had not, there would have been a further issue regarding the valuation.

The parties at the time of the property sale agree to allocate £35,000 to equipment, however, under the capital allowances calculation this figure was £18,458, and the figure overruled by HMRC.  The reason being that the value transferred can only be the maximum amount claimed by the vendor, a figure half the value in the contract.

The case demonstrates that whilst the HMRC had just cause to dispute the figures, and do check capital allowances claims, it is also reported they acted unreasonably during the proceedings, going back on previously agreed values.  This case emphasises the importance to use an experienced Capital Allowances advisor who has dealt with HMRC and the Valuation Office, as well as the Tribunal, to ensure a favourable outcome without incurring avoidable expensive costs.