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Case Law – Mersey Docks & Harbour Company v HMRC

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

14 Jan 2025

Written by: Clive Curd

Case Law – Changi Airport Loses $273m Tax Break

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

20 Dec 2024

Written by: Tom Lo

Furnished Holiday Lets – HMRC Clarify Legislation

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

07 Nov 2024

Written by: David Gibson

Archive

 

Latest News

Case Law – Mersey Docks & Harbour Company v HMRC

14 Jan 2025

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

Case Law – Changi Airport Loses $273m Tax Break

20 Dec 2024

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

Furnished Holiday Lets – HMRC Clarify Legislation

07 Nov 2024

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

New Case Law – Capital v Revenue

04 Oct 2024

A recent important Supreme Court decision in Centrica Overseas Holdings Limited v HMRC addresses the deductibility of expenses incurred by a company. The bar to deduct costs has been raised considerably

HMRC To Increase Scrutiny on Capital Allowances Claims

04 Oct 2024

Not only are Allowances more advantageous than ever before, but HMRC are strategically targeting tax leakage – including through Capital Allowances. Getting the correct advice is essential

100% Full Expensing – What is it and why it’s important

09 Sep 2024

Hailed as the “Greatest Tax Break in History” when it was introduced in 2021, the 130% Super Deduction aimed to take some of the sting away from the hike in Corporation Tax rate that was announced in the same speech. Its replacement, Full Expensing (FE), took over in April 2023 as a slightly less headline-grabby 100% First Year Allowance. But what is it?

Some Good News for Furnished Holiday Let Owners

05 Aug 2024

Positive transitional rules have now been published allowing Furnished Holiday Let owners the ability to use Capital Allowances beyond April 2025

Case Ruling – HMRC v Altrad Services Limited

10 Jul 2024

The decision by the Court of Appeal will have far reaching implications in that it clearly resets the boundaries of what is a capital allowances avoidance scheme designed to increase the quantum of capital allowances claimed

Spring Budget Update

06 Mar 2024

Chancellor Jeremey Hunt announces changes to the capital allowances legislation affecting furnished holiday let owners

Receiving accurate and professional Capital Allowances advice has never been more important.

Not only are Allowances more advantageous than ever before, but HMRC are strategically targeting tax leakage – including through Capital Allowances – with plans to recruit 5,000 additional compliance officers over the next five years.

Capital Allowances rarely stand still. Chancellors can’t seem to resist tinkering, and adjustments to Capital Allowances have been included in every Finance Act since the current legislation was introduced in 2001.

Facing budget cuts stemming from the Global Financial Crisis and struggling to keep tabs on non-compliant claims, restrictions introduced in 2012 and 2014 were designed to make HMRC’s job of policing the legislation easier.

In reality, all the changes accomplished was to create more rules for ill-informed or badly-advised taxpayers to overlook.  Consequently, many Capital Allowances claims over the past few years have gone unchallenged by HMRC, despite not being in adherence with the legislation.

HMRC devoted a lot of its staff and resources to monitoring the Coronavirus Job Retention Scheme and other targeted pandemic recovery reliefs and incentives.  As that work tails off we can expect to see existing staff – plus a share of the 5,000 new recruits – deployed to other areas.  None are more topical or high-profile right now than Capital Allowances.

Already we have seen a notable uptick in enquiries into Super Deduction and Full Expensing claims, after many years of claims being nodded through.  This increased activity is very welcome – we’ve long called for a higher level of scrutiny into Capital Allowances claims to weed out some of the unscrupulous advisers operating in the market.

Typical examples of errors (let’s be diplomatic and call them “mistakes”) that we’ve come across include:

  • Incorrect (or no) legal basis for claiming on property acquisitions
  • Allocating expenditure to the profit and loss account despite being capital in nature
  • Claiming Capital Allowances without supporting evidence
  • Wrongly claiming Full Expensing or Super Deduction
  • Claiming structural works as main pool plant and machinery
  • Allocation of expenditure to incorrect pools
  • Claiming for assets in non-qualifying areas of mixed-use property

Capital Allowances is a complex and fluid area of tax law.  With both the value of tax relief and the likelihood of HMRC enquiry reaching historic highs, investors should seek out specialist guidance from advisors who are professionally qualified.  This is the only way to benefit from the full incentive without overstepping the mark.