What is the opportunity?
There is an opportunity to have a FREE review undertaken to identify any parts of your commercial property qualifying for capital allowances. CRM can arrange this on a no upfront charge and no win/no fee basis – you only pay a small percentage of any claim identified and accepted by HM Revenue & Customs. This is a very highly specialised area requiring the input of surveyors and tax experts as well as negotiation with HMRC, so very often no claim has been made because very few firms have access to the expertise to identify and agree with HMRC the allowances due to you.
How does this review help?
Normally you only get tax relief on the cost of the building when you come to dispose of it, and the original cost is deducted from the sale value. By identifying items within the building which qualify for capital allowances, you are able to offset part of this cost against your profits charged to income tax or corporation tax each year (and often retrospectively for the last two years to obtain a refund of tax already paid). Furthermore, this exercise will not reduce the cost of the building for capital gains purposes – you effectively get relief on the same expenditure twice. Claims are often in the region of 20-35% or more of the cost of the building, so the potential tax savings can be significant. Remember all claims are explicitly agreed with HMRC – this is not an artificial tax avoidance strategy – it is using the legislation as intended by parliament.
Why do this now?
Firstly, it is quite normal (but of course not guaranteed at the outset) that a significant tax rebate can be claimed once valuations have been agreed with HMRC. This has a clear cash flow benefit, as does the availability of capital allowances each year going forwards to reduce your taxable profits.
Secondly, the 2012 Finance Bill contains provisions aimed at restricting the availability of these capital allowances where buildings are acquired from April 2012 onwards. As it stands, these provisions should not apply where you acquired the building before April 2012. However, in the initial consultation, HMRC suggested that these proposals should apply to all buildings within two years. Therefore it seems likely that HMRC will, in the future, attempt to restrict relief for those property owners who have not already claimed it, so our recommendation is to establish and agree your position now.
There are two broad qualifying criteria to benefit from a review:
- You own property with a cost price of over £300,000
- The legal entity which owns the property is taxable (e.g. not a pension fund)
There is no fee to pay for unsuccessful claims, or where no claim is possible, and no upfront charges whatsoever, so there is nothing to lose and plenty to gain from arranging a free review.
How do we arrange a free review?
There are some straightforward forms to complete, available from Alan Sowden on 01865 379272 or by e-mail.