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New Case Law – Gas Storage

A case Cheshire Cavity Storage 1 Limited and (2) EDF Energy (Gas Storage Hole House) Limited v The Commissioners for HM Revenue and Customshas been determined at the Upper Tax Tribunal (UTT).  Does a cavity formed to store gas satisfy the requirements to be allowed as plant?

25 Apr 2021

Written by: Clive Curd

Short on Time? Super Deductions in Brief

For those short on time, we have provided a bullet point summary of the key points, who can claim and considerations when claiming.

20 Apr 2021

Written by: Nolan Masters

Are Property Investors Invited to the ‘Super-Deduction’ Party?

The fanfare surrounding the announced ‘super-deductions’ was somewhat soured for property investors, in reading of a restriction on ‘leased’ plant and machinery.  Here we set out why for some investors, there is still a way to benefit from these generous temporary tax reliefs.

20 Apr 2021

Written by: Nolan Masters

Archive

Latest News

New Case Law – Gas Storage

25 Apr 2021

A case Cheshire Cavity Storage 1 Limited and (2) EDF Energy (Gas Storage Hole House) Limited v The Commissioners for HM Revenue and Customshas been determined at the Upper Tax Tribunal (UTT).  Does a cavity formed to store gas satisfy the requirements to be allowed as plant?

Short on Time? Super Deductions in Brief

20 Apr 2021

For those short on time, we have provided a bullet point summary of the key points, who can claim and considerations when claiming.

Are Property Investors Invited to the ‘Super-Deduction’ Party?

20 Apr 2021

The fanfare surrounding the announced ‘super-deductions’ was somewhat soured for property investors, in reading of a restriction on ‘leased’ plant and machinery.  Here we set out why for some investors, there is still a way to benefit from these generous temporary tax reliefs.

Claiming Super Deductions – Benefit & Restrictions

20 Apr 2021

In an unexpected offer of generosity, as part of the Chancellor’s spring budget, temporary ‘super’ capital allowances were announced with a view to kick start the post covid recovery.  Here we set out the requirements for making a claim and the benefit on offer.

Veritas in AI Collaboration with Brunel University

30 Mar 2021

Following a recent application through Innovate UK Veritas Advisory, together with Brunel University London, are developing AI-assisted technology to aid SMEs to more efficiently collect and categorise data for tax assessment and tax relief

New 130% Super Deduction Explained

06 Mar 2021

Veritas have been in direct correspondence with HMRC with regards to the new 130% Super Deduction and specifically how it is applied on leased assets. Despite initially appearing as an exclusion on all leased assets, which would encompass most investment properties, there are opportunities to claim the new allowance.

Capital Allowances on Freeports

15 Dec 2020

The Government have issued the responses to the Freeports Consultation, originally published in February 2020, and will offer Enhanced Capital Allowances in Freeport Tax Sites plus a Freeport-specific, Structures and Buildings Allowances.

Society of Trust & Estate Practitioner (STEP) Webinar – Jersey Branch

12 Dec 2020

Veritas Advisory Directors Clive Curd and David Gibson presented on Capital Allowances to the members of STEP Jersey, highlighting the increased importance of Capital Allowances to offshore investors, and how to maximise the potential tax reliefs available including tax planning for future liabilities such as Capital Gains Tax.

£1,000,000 AIA Extended for 12 Months

13 Nov 2020

In a positive move the Government has today announced that the current Annual Investment Allowance (AIA) of £1,000,000, which was due to revert down to £200,000 on 1 January 2021, will be extended for a further year to 1 January 2022.

There have been several changes to how offshore investors are taxed and nearly all have resulted in increasing the tax payable, reducing the returns on investment; consideration of Capital Allowances to reduce their tax bill should always be made and for offshore companies the savings equate to £190,000 in every £1,000,000 of expenditure incurred.

There have been two main changes to how offshore investors are now taxed:

From April 2019 – Offshore Investors Subject to Capital Gains Tax

Offshore investors are now taxed on gains on their property from April 2019 but it is likely that the effects of this won’t be felt until 2021 or beyond.

Capital Allowances though can be used to reduce the amount of capital gains tax on sale, with SPVs able to potentially further enhance their savings by way of balancing allowances.

From April 2020 – Offshore Investors Brought Within UK Corporation Tax Legislation

Whilst initially the tax rate has fallen from 20% (non-residents) to 19% (UK corporation) there are rumours that the corporation tax rise will be increased in the coming months, potentially up to 24%.

This coupled with restrictions in both interest rate relief and the amount of losses that can be carried forward has given rise to increased tax liabilities for offshore investors, reducing returns on investments.

Capital Allowances are the only way to reduce the taxable profit and there are more opportunities than ever before to reduce both tax on income and on the gain at sale.

Opportunities to Claim

Offshore companies have significant opportunities to claim tax relief through the following:

  • Unclaimed allowances on historic expenditure; there is no time limit to making a claim on historic expenditure, as long as you still own the fixtures
  • New Structures & Buildings Allowance
  • Land Remediation Relief at 150%; this can only be claimed by UK companies so previously excluded offshore entities

Offset Taxable Income & Capital Gains Tax

As an example a property is acquired for £10,000,000 and sells for £12,000,000 after 3 years. Taxable income, per annum, after all deductions, is £300,000.

The tax on all 3 years income could be offset using Capital Allowances (£900,000 x 19% = £171,000).

In addition, the tax on the capital gain (£2,000,000 x 19% = £380,000) could also be reduced by writing down at the relevant rate. If the company were an SPV and ceased to trade then it may also be possible to enhance the tax savings by claiming a balancing allowance.

Capital Allowances More Complex

The Capital Allowances legislation is becoming more complex so there will be changes required by investors to capture these allowances. Every transaction is unique, has a valuation aspect and requires legal entitlement checks, and together with the additional due diligence requirements of Structures and Buildings Allowances they are not guaranteed or simple to claim.

A suitable qualified, regulated, and experienced advisor should be part of the team for every transaction.

What steps should be taken?

  • Acquisitions – carry out due diligence at Heads of Terms stage
  • Disposals – check if you have claimed and retain the benefit using a S198 election
  • Developments / refurbishments /fit outs – review and claim all expenditure
  • Historic Expenditure – schedule list of properties and dates and quantum of historical spends