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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:

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.

1. Assist Meeting Reporting Deadlines

  • Accountants are seemingly busier than ever and often do not receive notification of building works having been undertaken by clients, or the detail of such works, until just before tax returns are required to be submitted.
  • We can work alongside client’s advisors providing Capital Allowances advice ensuring the client has maximised its full tax savings including the 130% super deduction which ends March 2023; there still remains time to review expenditure incurred over the past two years. 

2. Reduce Risk – Capitalised Expenditure v Profit & Loss

  • Many clients write-off 100% of their construction expenditure to the P&L and not as capital, overstating the revenue position and increasing the chance of an HMRC enquiry.
  • GAAP requirements mean that building projects and associated professional fees must be capitalised where there are any works capital in nature as outlined in the HMRC manual https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim42215
3. Reduce Risk – Typical Errors Giving Rise to HMRC Enquiry
  • Structures & Buildings Allowances (SBAs) – Failure to evidence contract and first use dates of all building contracts and incorrectly claiming SBAs on items normally qualifying as plant and machinery or revenue deductions. he P&L and not as capital, overstating the revenue position and increasing the chance of an HMRC enquiry.
  • Capital Allowances Claims on Property Purchases – Failure to provide full residual land value calculations and instead use of ‘percentage of purchase price’ land values, or omit the HMRC apportionment multiplier completely.

4. Poor Construction Cost Information

  • Lack of detailed cost information to support invoices means accountants are missing capital allowances and allocating as non-qualifying expenditure in the tax computations. A capital allowances advisor with surveying and tax expertise will be able to value and breakdown this expenditure to claim capital allowances in a format acceptable to HMRC.

Action Points

Contact Veritas Advisory for advice on the following:

  • Cash Flow Forecasts, Capital Allowances Estimates & Claim Production
  • Technical Advice & Internal Capital Allowances CPD Sessions (no charge)