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)