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Veritas Article in Property Week Magazine

As part of the Property Week magazine Covid-19 support hub Veritas Advisory director Nolan Masters highlights how using Capital Allowances can help generate significant tax savings and ease cash flow problems.

08 Jun 2020

Written by: Nolan Masters

Veritas Article in Taxation Magazine

Veritas have published an article in Taxation Magazine setting out how to boost cash flow by identifying property tax reliefs. Key points addressed in the article include reviewing historic expenditure where allowances haven't been fully claimed, using capital allowances to mitigate future capital gains, the window of opportunity to claim and the benefit of utilising the annual investment allowance of £1,000,000.

03 Jun 2020

Written by: Nolan Masters

Capital Allowances Guide for PAI Member Firms

Veritas Advisory director Clive Curd has prepared a Capital Allowances guide for all member firms of the Independent Commercial Property Agents Network (PAI) for which Veritas Advisory are the recommended Capital Allowances advisor.

01 Jun 2020

Written by: Clive Curd

Archive

Latest News

Veritas Article in Property Week Magazine

08 Jun 2020

As part of the Property Week magazine Covid-19 support hub Veritas Advisory director Nolan Masters highlights how using Capital Allowances can help generate significant tax savings and ease cash flow problems.

Veritas Article in Taxation Magazine

03 Jun 2020

Veritas have published an article in Taxation Magazine setting out how to boost cash flow by identifying property tax reliefs. Key points addressed in the article include reviewing historic expenditure where allowances haven't been fully claimed, using capital allowances to mitigate future capital gains, the window of opportunity to claim and the benefit of utilising the annual investment allowance of £1,000,000.

Capital Allowances Guide for PAI Member Firms

01 Jun 2020

Veritas Advisory director Clive Curd has prepared a Capital Allowances guide for all member firms of the Independent Commercial Property Agents Network (PAI) for which Veritas Advisory are the recommended Capital Allowances advisor.

4 Simple Steps to Reduce Income Tax

27 May 2020

The practical aspects of partnerships and individuals claiming on historic expenditure, if there are any time restrictions to submit a claim and how to overcome potential barriers such as lack of supporting detailed cost information are often unclear. We set out 4 simple steps to follow in order to realise these tax savings

4 Simple Steps to Reduce Corporation Tax

27 May 2020

Companies are often unclear on the practical aspects of claiming against historic expenditure, if there are any time restrictions to submit a claim and how to overcome potential barriers such as lack of supporting detailed cost information. We set out 4 simple steps to follow in order to realise these tax savings

Veritas Support Dog Rescue Charity

27 May 2020

Veritas Advisory have chosen to be a supporter of Candy Cane Rescue, a charity rescuing exported greyhounds and other dogs from the meat markets in China, and for which Veritas Director David Gibson is a Trustee.

Property Agents Independent (PAI) Network Blog

15 May 2020

During the unprecedented pandemic we shared our views to the Property Agents Independent (PAI) network on how to aid businesses by enhancing cash reserves through the claiming of capital allowances on unclaimed historic property expenditure.

It’s Not Too Late For Some – Further Claim Opportunities

23 Jan 2020

If you are reading this and thinking it’s too late we already completed on a deal there may still be some available capital allowance claims which can be pursued, even if the contract is silent or an election for £2.00 has been signed up to. Here we set out further claim opportunities, irrespective of contract.

Don’t Look Back In Anger – How To Avoid Missing Out

23 Jan 2020

Whilst there are capital allowance claims that can still be pursued irrespective of the adopted contract position, missing out on valuable tax relief is likely unless key capital allowance due diligence checks and contract provisions are set out before exchange. Here we set out some of the key tasks to avoid losing out.

It has taken HMRC a year since the Structures and Buildings Allowance (SBA) was announced in the November 2018 budget to publish the detailed guidance on its new tax give away for capital expenditure on all non-residential buildings, whether they are built from new, extended, tenant fit out, or refurbished.

The estimated cost to the Treasury, or put it another way, the amount the taxpayer can save in 2019-2020 is £165million, and HMRC will spend £17million to put their systems in order to cope with this change!

Is it worth it?
The tax relief is 2% of the qualifying expenditure leading some clients to question whether this tax allowance is worth the effort of making a claim?

Perhaps the response is do you want to pay less tax or potentially disrupt a future sale by not having the relevant information to hand to transfer to a Buyer? The allowance rate may only be 2% but on a £10m industrial development the allowance is worth about £350,000 in tax savings over ten years, not something to be sniffed at.

Additionally, because of the interaction between the SBA and capital gains on sale, it is now more important than ever to use a specialist with the appropriate skills to value and maximise the plant and machinery allowances thereby reducing potential future gains.

Guidance Note Explanations
The guidance notes have provided some further explanation on the following points:

  • An SBA allowances statement must be maintained but does not have to be routinely disclosed to HMRC. However, as demonstrated by the recent Hora Tevfik v HMRC case it is beneficial for the taxpayer to submit the statement to HMRC, otherwise there is a risk of enquiry beyond the normal time limits.
  • Where no construction contract exists, maybe because in-house, or an agreement, HMRC clarify that an email exchange would satisfy the evidence required
  • How to calculate the SBA figure where a project has both qualifying and non-qualifying use, or is constructed in multiple phases
  • Definition of residential us; although the SBA definition of residential is different to that used for plant and machinery allowances. So what evidence is required to substantiate a claim?

What evidence is required to substantiate a claim?
Unless the following is provided the SBA claim is NIL:

  • Evidence of construction expenditure incurred
  • Relevant documents to support the date of earliest construction contract
  • Calculations of their just and reasonable apportionment (where purchase price is the relevant expenditure)
  • Date of first use, for the purpose of an SBA claim

Definition of Residential
The definition of residential is defined, but perhaps has confused the definition compared to other allowances, namely plant and machinery.

  • Hotels qualify, but aparthotels do not
  • Care homes qualify for P&M, but old age, and self-contained without personal care do not
  • Furnished holiday letting qualify for P&M but not for SBA.
  • Residential common areas qualify for P&M, but not for SBA.
  • Structures in residential common areas qualify for P&M, but not for SBA.

Potential issues for the calculation
There are added complications in calculating the allowances, especially on multi-let properties undergoing refurbishment programmes and mixed use developments, but on all projects we envisage potential issues arising from ensuring that the basis of the calculation is correct and excluding from the calculation any of the following:

  • Certain architect fees
  • Planning fees
  • Expenditure which could qualify for land remediation relief
  • All expenditure that could qualify for plant and machinery and integral features
  • On costs to various packages including professional fees

The new SBA is a welcome relief and a valuable one particularly where properties are held over a number of years. For any queries on the legislation then contact one of the Veritas Directors.