The Initial Purchase
A £2million hotel in Bath
Back in 2013, a couple invested £2,000,000 in a hotel in Bath. Unfortunately, they did not receive the necessary advice and therefore lacked an understanding of capital allowances. Consequently, they missed out on a substantial tax relief opportunity worth about £500,000. Without a capital allowances specialist, important steps were not taken to secure this benefit.
The Unseen Consequences
A potential offer for the Hotel
In 2024, the couple received an offer for the hotel from an investor. This investor showed a huge amount of interest in the capital allowance position. The buyer was going to great lengths to ensure the CAs were to be passed over as part of the deal. They realised their mistake when the current owners asked us to analyse the transaction just two days before the sale was finalised. This did not leave enough time to correct the problem.
Realisation and Negotiation
A tax benefit worth £500,000
With our expertise, we helped the sellers realise they were about to give away a significant tax benefit worth about £500,000.
When they discovered the value of the available capital allowances, the sellers attempted to renegotiate a division of these benefits between themselves and the buyer. Unfortunately, this proposal led to the buyer threatening to withdraw their interest in the purchase leading to the loss of a £3,000,000 sale. To add insult to injury, the sellers had no option but to concede and pass the CAs over to the buyer.
The Importance of Expert Guidance
An expensive lesson
This lack of understanding and advice, unfortunately, is not unusual. It often proves to be a very expensive mistake as this case is a stark example of. Many investors and property owners, like the couple in this scenario, may not fully grasp the complexities of capital allowances and the substantial tax benefits they can offer. Without expert guidance, they risk losing out on significant financial advantages.
Had the couple sought specialised advice during their initial purchase, they could have secured the tax relief and it all could have been easily avoided. An expensive lesson learned.
An extremely positive and professional experience
“We just wanted to express our thanks to the team. From the first conversation when we called the office, through to Sue, Paul, and Dave we have experienced a very genuine, responsive, knowledgeable, and supportive hooked-up team. Thank you and congratulations on a great culture. Having engaged in the sales transaction before Christmas, you have all helped make an extraordinarily draining and challenging process a great deal more positive and life-confirming. Thank you.”
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