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Capital v Revenue – Understand The Risks v Benefit

As we are fast approaching the self assessment filing deadline for individuals and the amendment window for corporate entities with a year end of March, understanding the importance of what constitutes capital or revenue expenditure, and the risks and benefits associated with it, is extremely important.

24 Jan 2024

Written by: Matt Bell

First Year Allowances for Corporate Members of Partnerships

In a positive move HMRC have updated their capital allowances guidance for partnerships stating that partnerships with underlying corporate partners can claim first year allowances

19 Jan 2024

Written by: Abu Choudhury

Substantial Unclaimed Capital Allowances On Existing Assets

Capital Allowances provide an opportunity to save substantial amounts of money in a lean market yet many property owners and occupiers are already sitting on vast savings without even knowing it.

23 Oct 2023

Written by: David Gibson

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Latest News

Capital v Revenue – Understand The Risks v Benefit

24 Jan 2024

As we are fast approaching the self assessment filing deadline for individuals and the amendment window for corporate entities with a year end of March, understanding the importance of what constitutes capital or revenue expenditure, and the risks and benefits associated with it, is extremely important.

First Year Allowances for Corporate Members of Partnerships

19 Jan 2024

In a positive move HMRC have updated their capital allowances guidance for partnerships stating that partnerships with underlying corporate partners can claim first year allowances

Substantial Unclaimed Capital Allowances On Existing Assets

23 Oct 2023

Capital Allowances provide an opportunity to save substantial amounts of money in a lean market yet many property owners and occupiers are already sitting on vast savings without even knowing it.

The Risk to Lawyers of Not Correctly Addressing Capital Allowances

23 Oct 2023

Solicitors acting for clients on a purchase or disposal of a commercial property must ensure they correctly address capital allowances; failure to do so may give rise to reputational and / or financial risk.

Maximising Capital Allowances and Avoiding Pitfalls Through Timing

23 Oct 2023

The rules surrounding the transition between Super Deduction and Full Expensing can be complex and the importance of fully analysing and understanding any contract for construction or purchase is significant.

Use Capital Allowances to Help Pay for Higher Spec Offices

23 Oct 2023

On a typical £1m CAT B fit out the landlord or occupier, whoever is incurring the expenditure, could recover up to £250k by claiming Capital Allowances.

HMRC Capital Allowances Enquiries Focusing On Certain Sectors

26 Sep 2023

An increasing number of claims being submitted to HMRC are not fully compliant with the legislation, and in some cases are double what they should be, particularly in certain industry sectors.

Unearthing Hidden Treasures – LGT Wealth Article

01 Sep 2023

Veritas Director David Gibson was recently interviewed by Nicholas Duffy of LGT Wealth Management for thoughts on how family offices and property owners can identify Capital Allowances to help leverage other investments. Click here to read in full

Offset ESG Costs With Capital Allowances

09 Aug 2023

The impact of both ESG and MEES on the property sector is resulting in significant capital investments. To incentivise and reduce the net cost of capital investment, tax relief is available by way of capital allowances.

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, as a silo and as a cold store.

There are similarities to a previous case, May & Amor v RCC [2019] UKFTT 32 (TC), where the taxpayer won the case for a grain store acting as a silo.  This demonstrates that HMRC is prepared to contest a claim for plant for a similar asset.  With the introduction of the “super allowance” at 130%, we would expect more taxpayers to consider claiming assets described as buildings and structures to be claimed as plant.   Careful consideration of the facts, interpretating case law with fully backup arguments will be necessary with a greater potential for disputes with HMRC.  In this case the value in dispute was £319,483, modest when compared to other cases such as SSE Generation v HMRC for £260million.

The case involved the taxpayers specialised activity of growing crisping potatoes, and being able to supply a consistent quality throughout the year.  This involves storing the potatoes for long periods of time in a controlled environment, both for temperature and moisture and drying.  The design and construction of the store, along with the computerised controls, are very different to a “warehouse”, the floor, walls, plenum plant room, and the size all are key to the function of storing potatoes.  The store was 6 times more expensive than a standard building.

The Capital Allowances legislation defines a building and a structure in CAA2001 S21 and S22.  However, under CAA2001 s23, “a silo and a cold store” are unaffected by S21 and S22.  The case required applying the function, business, and premises tests to determine the outcome based on case law.  Further arguments were made by HMRC on the interpretation of “storage”, a “silo” and a “cold Store”, all of which were unsuccessful.