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Insights
Insights
Insights
23 Mar 2022

Capital Allowances Incentives to Increase?

In a positive move to encourage capital investment Rishi Sunak announced in the 2022 Spring Statement plans to expand the Capital Allowances legislation, subject to a consultation process, to be formally announced in the autumn budget and to take effect from April 2023. 

Amongst the considerations are the following:

  • Increase the Annual Investment Allowance permanently to £500,000 from £200,000
  • Increase main pool and special rate allowances from 18% and 6% to 20% and 8%
  • Introduce a first year allowance for main pool and special rate pool of 40% and 13%
  • Introduce an additional first year allowance that equates to over 100% of initial cost
  • Introduce potential ability to write off costs of qualifying investment in one go
  • Improving the Structures and Buildings Allowances and Freeports allowances

Insights
02 Nov 2021

Veritas Contribute to UKAA Publication – Improving Returns on Build to Rent

With corporate tax rates set to jump from 19% to 25% in 2023, owner-operators of Build To Rent should now consider claiming capital allowances.  This long-standing form of UK tax relief can often be overlooked or under claimed.

As a member of The UKAA, we were pleased to be invited to contribute to their latest buzz news issue, in which we explain how investors-operators of build to rent can improve investment returns by claiming capital allowances. Click here to read the article

 

Insights
18 Oct 2021

Veritas Confirmed New Member of UKAA – The Organisation for the UK Build to Rent

Veritas Advisory have now been confirmed as a new member of UKAA, the organisation for the UK Build to Rent sector.

The UKAA was launched in 2016 as in response to a growing awareness of the need for a single unifying body to the Build To Rent sector and to the increasing levels of interest in Build To Rent from many parties – government, investors, operators and above all customers who want to rent purpose built homes from professional landlords.

The UKAA aims to communicating how Build To Rent can help address the UK’s housing crisis, developing best practice amongst the members, raising standards and focussing on end customers and creating the authoritative source for information on Build To Rent in the UK.

Capital Allowances are significantly underclaimed in the Build to Rent sector and together with the UKAA we aim to readdress this going forward.

For more information about the UKAA visit www.ukaa.org.uk

 

 

Insights
01 Oct 2021

Veritas Supporting Charitable Causes

We have chosen to support four charitable causes reflecting activities that are close to us and to people we know and would like to raise awareness of. Please do click on each cause to find out more:

World Land Trust

Protect and sustainably manage natural ecosystems of the world, conserve biodiversity with an emphasis on threatened habitats and species.

Jonathan Wallach – Raising Funds for An Incubator at Chelsea & Westminster Hospital

Jonathan Wallach of Everton Phillips is running the Marathon De Sables, an exhausting 6 marathons in 7 days across the Moroccan desert, to raise £30k for a new incubator at Chelsea & Westminster Hospital.

Candy Cane Rescue

A dog rescue charity of which Veritas Director David Gibson is a Trustee, which rescues and cares for greyhounds and other breeds from the Chinese meat trade and underground racing tracks where they are kept and killed in barbaric conditions.

The Worshipful Company of Joiners and Ceilers 

A Livery company that sponsor learning of trades and skills at schools and provides bursaries to assist apprentices

Insights
27 Sep 2021

Using Artificial Intelligence for Capital Allowances

The increasing complexity of the Capital Allowances legislation, differing allowances available specific to building uses or certain taxpayers, the introduction of Structure and Buildings Allowances, the timing restrictions on allowances qualifying for 130%, 100% or 50% and the various rules on disposal have created layers of difficulty in calculating and maximising capital allowances tax relief.

The ‘complexity’ issue results in tax incentives being both under and overclaimed, incorrectly categorised or not being claimed at all!

One way to part overcome this is the use of artificial intelligence. In addition to preparing detailed claim reports for clients, Veritas Advisory, in partnership with Brunel University and Innovate UK, are applying technology to solve some of the issues, the main one being how to use data efficiently and correctly.

Put simply, capital allowances is a process of coding expenditure to the correct category, interpreting the relevant legislation at date of expenditure, applying the prevailing rate of allowance, calculating the “pool” of allowances entering the figure into the tax return to reduce taxable profits resulting in paying less tax.

However, rarely do construction projects and ledgers provide data in a tax friendly format or in sufficient detail to maximise a claim and it is not possible to identify qualifying expenditure ancillary to the installation of plant and machinery merely by reviewing contract documents. Unless a Capital Allowances advisor is appointed to analyse the data in detail significant tax relief will remain unidentified and unclaimed.

As part of our team, we have data scientists to develop a software application using the latest technology to help both the SMEs and their advisors to create a more accurate, and efficient claim process for tax reliefs.  Adaptation to change will be part of the process and the accuracy of the outputs will increase over time by using blockchain technology.  Together with industry advances in the data, future incentives will be better applied so they are directed to the specific investment.

In the coming months we will be looking for partners to assist us in testing and piloting the process; please contact Kwang-Sung Chun to register your interest on Kwang.chun@veritasadvisory.co.uk.

Insights
07 Aug 2021

New Case Law – Potato Store is Plant

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.

Insights
20 Jul 2021

Estates Gazette Article – Capitalise on Allowances

Veritas Advisory Director Nolan Masters, together with Alex Barnes a Partner at BDB Pitmans LLP, have published an article in Estates Gazette on how capital allowances claims can mitigate the increasing cost of tax on property investment.

Click here to read the article

 

Insights
16 Jul 2021

New Case Law – Satellites

A Capital Allowances case Inmarsat Global Limited and The Commissioners for Her Majesty’s Revenue and Customs UT/2019/0167 V), has been refused by the Upper Tier Tribunal.

The case involved claiming the launch costs for 6 satellites in the 1990’s.  The original entity that owned and built the satellites was exempt from tax, so when Inmarsat incurred the costs of launching, not the cost of the satellites, they realised after the event that they would miss out of the very valuable tax relief.

The costs may have been allowable as ancillary to the trade, however at the time of launches, they did not own nor had built the satellites.  There was a finance lease in place for the ownership of the satellites, who claimed capital allowances on their construction.

Inmarsat’s basis for claim was that there was succession to the trade when they took on the leases after the launch costs had been incurred.  However, the FTT argued that S78 of CAA 1990 did not apply because the satellites never belonged to the Inmarsat at the time of the launch costs were incurred and had not incurred the cost on the satellites.

This case highlights that capital allowances is a complex area, and advice should always be considered before the expenditure takes place, to ensure that a claim can be successful.

 

Insights
04 Jul 2021

Taxation Magazine Article – The New Super Deduction

In the June edition of Taxation Magazine Veritas Advisory Director Nolan Masters set out how the new super deduction and special rate allowances will affect property owners, occupiers and investors. Click below to read the article

Taxation Magazine Article – Super Deduction