Capital Allowances Countdown – deadline 31 March 2012

From April 2012 it is likely that there will be an absolute deadline for making capital allowances claims. This is likely to be 1-2 years. At present there is no time limit for making claims and they may be made at any time in open tax returns provided the assets are still used.

If, as appears likely HMRC brings in new legislation from April 2012 the effect will be that unless capital allowances claims have been fully made they are likely to be time barred.

Positive Opportunity
There is an opportunity to make increased claims for capital allowances where information was not previously provided by clients. Examples will be where commercial properties were acquired and no allowances claimed often because the value of “embedded plant” was included within the price for the freehold/leasehold.  There may be cases where clients had poor records to support building costs. By working with us we can jointly spot these opportunities and present them to clients in a positive manner and promote them on the basis that there is a short window of opportunity during which HMRC will accept these claims.

Negative Potential
This opportunity will be heavily promoted direct to your existing clients by other accounting and tax firms along with niche specialists. It could be awkward if these opportunities are identified by third party providers who are also seeking to lure clients away from you for full service work.

Also it is conceivable that after the deadline when claims are time barred some clients may seek to make claims against PI. It is therefore really important to positively present this opportunity at a timely stage.

Information Required
We would need to review the tax computations for the past 4- 6 years. Specifically the fixed asset summary and capital allowances sections. From this we can spot opportunities. Key triggers are freehold properties purchased for greater than £500k or cumulative non qualifying leasehold additions exceeding this amount.

Case Studies

Hotel Owner

A hotel company bought two hotels in 2005 for £3m.  No details were provided by the previous owner of the capital allowances claimed.  Our specialists pieced together the tax history through site inspection and detailed valuation and identified additional allowances of £700,000.

Office Occupier

An office carried out a refurbishment of £0.6m in 2008.  They had a dispute with the builder and no cost records were available other than invoices.  As the invoices had no detail, capital allowances were not claimed in the tax computations.  A review and valuation by our specialists identified allowances of £400,000.

Fees
Fees are charged @ 6% (plus vat) of the additional expenditure which is identified as qualifying for capital allowances.  This fee can be reduced depending upon the size of the case.  We pay an introducers fee on conclusion of a successful review.