Capital Allowances in the CPSE.1

What is a CPSE?

First, Understanding CPSE

Before diving into the intricacies of capital allowances, let’s decipher the enigma of CPSE. The Commercial Property Standard Enquiries is an important document that provides information required to prepare a contract for the purchase or sale of a commercial property. As well as other information, it provides essential details about capital allowances to help the purchaser and seller.

CPSE.1 Version 4.0

The current version of the CPSE (CPSE.1 Version 4.0) was published in 2023

The set of CPSE documents was originally published in 2002. Providing an “industry standard” for both buyers and sellers to exchange the relevant information during a commercial property transaction.

The current version of the CPSE (CPSE.1 Version 4.0) was published in 2023.

Section 33 of the CPSE.1 addresses Capital Allowances & determines:

• If the seller was a developer or trader or was an investor or occupier.
• If the seller claimed capital allowances while they owned the property. If so, what is the value of these allowances.
• If the seller knows if any previous owners have made a capital allowance claim.
• If the seller will comply with the post-April 2014 requirements so that the buyer can benefit from any claimed and unclaimed allowances.
• Understand whether any tenants have carried out fit-out works to the property and claimed allowances on this expenditure

How is it Completed?

Precision and Clarity are Vital

The completion of the capital allowances section with the CPSE can be very clear, precise, and straightforward. This is only possible however when a clear and precise understanding of a seller’s capital allowance position is fully assessed and understood. A good capital allowance advisor can complete CPSEs in a manner that not only protects the seller’s position. But also provides clarity to the buyer to enable the subject of capital allowances to be addressed cleanly. Avoiding the risk of confusion, delays, and misrepresentation.

When it comes to capital allowances, consulting the right advisor at the right time can make a significant difference in several areas.

See our guidance notes for each question asked within this section.

A Two-Year Window

Time is of the Essence

After the purchase/sale of a property has been completed, there is only a two-year window to identify any capital allowances available and maximise the tax benefits. However, a two-window after-completion exists in theory. In practice, as soon as the transaction is completed, the buyer is on the back foot and it can be very difficult to secure capital allowances after completion. That said, there are transactions where the 2-year window isn’t applicable. A claim for capital allowances can be made against purchase costs retrospectively.

Whatever the transaction, we advise our network and those buying and selling property to contact us when an offer has been accepted and solicitors instructed.

We advise completing the capital allowances section of the CPSE.1. As well as being able to provide a survey of the assets if required, to maximise the benefits. It is important to note that any allowances not identified and claimed before the two-year window closes, could be lost forever.