What is the difference between movable and immovable capital allowances?
Movable items are self-explanatory, they are items that can be picked up and taken out of the building. Immovable items are not always as easy to identify as these items are embedded within the building. This means they are plastered in, bricked in, nailed in or screwed in.
Examples of Movable items
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Tables
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Beds
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TVs
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Wardrobes
Examples of Immovable items
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CCTV
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Lighting systems
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Fire alarm systems
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and even door hinges!
Why are items missed?
Movable items, such as furnishings, chattels, and equipment will have an invoice or a paper trail which is then picked up within a good accountant’s routines and the tax relief claimed accordingly. However, immovable items, like those embedded items listed above, in the walls, floors, and ceilings, often don’t have this paper trail and are therefore frequently missed.
The key point is…
If an item or system fulfills a purpose for the trade, then it could potentially qualify for tax relief subject to legislation applicable to each given scenario. A serviced office couldn’t typically function without heating, without telephone points, without nonslip flooring in the toilets, therefore HMRC could accept this as plant and machinery for the purpose of the trade.
Now, plant & machinery isn’t defined in law which is one of the main reasons accountants and businesses have relied on our expertise for 20 years. It is defined by HMRC as ‘an apparatus used for carrying on the business, is not stock in trade, and is kept for permanent employment in the business’… put simply functionality is a key consideration. This creates a misunderstanding and uncertainty about what qualifies and what doesn’t. The challenge this creates for those that do not seek expert advice is the risk items are claimed that shouldn’t be or, items are not claimed that should.
How can a claim be made on immovable items?
If there isn’t an invoice for these items or they were part of the building when it was purchased, then how is a claim possible? This is where a capital allowance specialist is needed. Part of our process includes a site inspection where a qualified surveyor visits the property, identifies the Property Embedded Fixtures and Fittings (PEFFs) within the property, and values them accordingly.
To see if your commercial property has unclaimed immovable capital allowances, get in touch now and benefit from our expertise!
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