About the claim
Our client was in the process of purchasing a commercial property and was looking to claim capital allowances on the plant and machinery within the property. Taking a proactive approach is crucial and enabled us to ask the vendor key questions. The vendor had provided a Section 198 in the purchase contract that incorrectly stated the capital allowance position. We were on hand to liaise with the vendor and their advisors to accurately understand the vendors property costs and treatment. This also enabled us to play a key part in the transaction to ensure a Section 198 Election was prepared correctly. Our research confirmed that capital allowances had already been claimed on general pool items. However, our team discovered that due to the timings of the special rate pool rules coming into force on 1st April 2008, certain allowances could not have been claimed by the vendor, leaving them available for our client to claim.
Our approach
To accurately calculate the available capital allowances, after confirming an approach was possible, we conducted a survey of the property. We prepared detailed surveying reports showing items embedded in the walls, floors & ceilings as well as external areas of the property.
Once we had calculated the plant and machinery values found at the survey stage, we then applied key legislation to each item to determine its qualifying status. It’s at this stage we can then produce a claim summary after applying the available and most efficient tax breaks via capital allowances. We determined that the annual investment allowance (AIA) was applicable due to the timing of the claim relative to the time of spend. However, the super-deduction was not available as it only applies to general pool items, and the structures and buildings allowance (SBA) was not applicable as this relates to new builds or improvements to a property.
After finalising the claim, we presented our findings to both the client and their accountant before the claim was applied to the company’s tax return.
Examples of some of the embedded qualifying items that we found...
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Surgery standard lighting panel
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Double small power socket
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Single radiator
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Electric extraction fan
An observation from our Claims Analyst, Ruby Whilock
“This highlights the importance of conducting a thorough assessment of available capital allowances, even if a Section 198 has been provided by the vendor. By using one of our surveying methods, which was to suit the clients budget and convenience, we were able to accurately determine the value of the plant and machinery and apply the relevant allowances, resulting in a significant tax saving benefit for our client.”
Testimonials
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The accountant
“We recommended our client utilise the expertise of Capital Allowance Review Service when purchasing their first dental practice. After initial contact, Chris Roberts spoke to both my client and the seller’s accountant to ensure the relevant forms were filled in correctly on purchase of the dental practice so my client could make a claim. Chris and his team gave updates throughout the process and produced a comprehensive report for us to make a claim for the capital allowances on the first tax return for our client as the dental practice owner. I would highly recommend that other accountants speak to CARS when they have a client purchasing commercial property as the whole process was incredibly easy and delivers a great result for your client”
Tom Slevin | Client Services Director
DJH Mitten Clarke -
The Client
“I didn’t know what to expect when working with CARS to complete my capital allowance claim, however, I was really surprised at how simple and straightforward the entire process was. They achieved a great result and I would happily recommend them to those who are looking for support with tax relief.”
The client
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