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Businesses are failing to claim tax relief on fittings in commercial properties, experts say, which could save them billions of pounds

Properties from fish and chip shops to the Gherkin in London (front right) could be missing out on capital allowances on fittings, tax experts say. Photograph: Stefan Rousseau/PA

British businesses could save billions of pounds if they claimed full tax relief on the commercial properties they own, according to City experts.

Taking advantage of capital allowances, companies can claim tax relief on fittings such as air conditioning, radiators, pipework, cabling, lighting and security systems – anything relating to the intrinsic fabric of the building – even if the property was bought a decade ago, according to Peter Millwood, tax partner at Deloitte.

But while accountants routinely claim on everyday purchases such as curtains, carpets, fire extinguishers and radiator covers, they often fail to claim on other, less-easy-to-spot fittings.

Without receipts, a detailed analysis is needed to ascertain the correct value of the qualifying assets within the property. Also, companies can only claim for an item once and need to check that a claim has not been made before. Specialist firms send forensic surveyors to draw up a list of all the fittings in every room, including hidden cabling, then feed it into a computer model with 8,000 different matrices that comes up with, say, a price of £47.50 for a door bell in an office built prior to 1950 in a certain area.

Millwood said the "sheer scale of legislation to battle with" was putting many smaller firms off. "In most cases, business don't claim as much as they could claim, and there are still many businesses who don't claim at all … it could be billions of pounds," he said.

There are about 1.4m commercial properties in England and Wales, according to government figures, ranging from fish and chip shops to the Gherkin. On a typical £1m property, a Capital Allowance specialist would typically find £200,000 of unused capital allowances, which, assuming a mid-point between the higher-rate and lower-rate tax bands, means there is £65bn to £70bn in net tax rebates sitting unclaimed in commercial properties.

As for a typical SME with a commercial property,  it could save about £25,000.

On 6 April, changes to the capital allowances rules kick in that could see "unwary buyers unable to claim writing down allowances on many investments", said Millwood. "Up until April, most buyers will continue to be able to attribute part of their cost of acquisition of commercial property to plant and machinery and claim tax relief against their profits. The amounts can be considerable, and can radically affect the viability of deals. From April, a buyer acquiring property from a seller who has claimed writing down allowances will not be entitled in most cases to claim going forward unless an election [written agreement] is in place."

Also, the annual investment allowance – the 100% write-off for plant and machinery, excluding vehicles – drops from £100,000 to £25,000.

A UK leading tax specialist, said the changes also meant that any tax rebates would be based on the previous owner's purchase price of the building. In many cases, where the value of the building has gone up, this means that companies planning to buy a commercial property should do it before April – or they stand to lose a sizeable proportion of their potential tax rebate. However, if the value of the property has fallen, they would be advised to wait until after 6 April.

Capital allowances on commercial property have always been a bit of a "dirty secret" since being introduced in the UK after the second world war.  The government had considered getting rid of them altogether, but agreed to the new rules after industry lobbying, amid fears that companies might relocate to other places with capital allowances, such as the US, France, Germany or eastern Europe.

URGENT  EARLY  WARNING RETROSPECTIVE  CAPITAL  ALLOWANCE  CLAIMS WILL  SOON  BE  TIME-BARRED

Buried within the 240 pages of the HM Revenue & Customs “Overview of Tax Legislation & Rates” dated 23.03.2011 (Budget Day) we have discovered the following little bombshell, which has very large and negative consequences:-

Paragraph 3.59 Capital Allowances:- Fixtures Mandatory Pooling

“The Government will consult on plans to introduce changes to the capital allowances Fixtures rules that businesses must pool their expenditure on Fixtures in a building within a short period of acquiring the building, in order to qualify for capital allowances.  A consultation document will be published at the end of May.”

At this stage we have no knowledge of what the Revenue believe to be “a short period” but it seems logical that they will start the ball rolling at two years (being the normal CT/600 amendment window); if so it will be the duty of every tax advisor to write and try to have the proposed time-bar extended (at least in the initial years).

Based on experience to date of such “HMR&C – Consultative Documents” we must assume that legislation will be introduced to limit retrospective capital allowance claims, probably from April 2012 (possibly earlier) – the unknown factor being what will the time limit be – and this is likely to be the only negotiable point in the Consultation.

There will be some tax advisors who read the above and say – “so what” – well here is a “what”  – Once a specific time-bar is in place if the advisor has failed to advise their client (in writing) of the implications, prior to the legislation becoming operative, then they face a very real possibility of a Professional Negligence Claim being made against them, if that client could have had a potential retrospective capital allowance claim outside of that time-bar.

The moral is you have been warned – now is the time to be checking all of your client files to see if they hold substantial freehold / long leasehold properties or indeed capitalized tenant’s improvements, which may well contain embedded Fixtures within the building, that could qualify for a retrospective capital allowance claim.

It should be noted that Contracts of Purchase often refer to an inventory of – Fixtures & Fittings / Chattles / Plant & Machinery – which will usually have been brought into the purchaser’s computation as an opening capital allowance pool balance but, it is much rarer to find reference to Fixtures within the contract, especially in the absence of a Section 198 CCA 2001 Election. In such cases it will usually require the expertise of a proven, specialist, capital allowance company to identify and value the embedded qualifying fixtures – we are that company.

This limit has largely gone unnoticed by many, and will almost certainly see many claimants who were originally entitled to take advantage of  these lucrative tax benefits missing out.  Salmon Business Group are now strongly urging everyone who we have already contacted regarding their claim to really sit up and take action NOW, or stand to lose £1000’s in tax rebates.

For further information regarding your Capital Allowance claim, please contact one of our Capital Allowance specialists to get your claim underway.

Telephone us now on 0114 293011, Alternatively email us on sales@salmon-business.com

Salmon Business Group are sole providers of Capital Allowances for NDNA member

NDNA members can expect to find details of this tax allowance in their next email newsletter

Salmon Business Group are providers of Capital Allowances to Day Nursery owners

Salmon Business Group were shocked as to the number of day nursery owners who have not yet taken advantage of their most lucrative tax benefit – Capital Allowances.  A Capital Allowance claim quite literally holds to keys to unlocking £1000’s in overpaid taxes, as well as providing on-going tax relief for future years.

The amount of tax benefit you can expect to acheive will vary dependent on the total acquisition cost of your building together with any subsequent improvements you might have made. The other consideration which have a bearing on the total identified tax pool will be the rate of tax you pay.

With such a large number of nursery owners who own the freehold to their day nursery having not made this claim, Salmon Business Group are now trying to spread the word of this tax benefit to as many nursery owners as possible.  National Day Nurseries Association members can expect to find out more about this tax allowance in their next email newsletter. If however you are not a member of the NDNA, don’t panic – simply visit call us direct today and ask to speak with one of our tax specialists and discuss your potential claim.

Call Salmon Business Group on 01246 293011
Alternatively, visit our web site for further information -
www.salmon-business.com

acquisition cost of your building together
with any subsequent improvements you
might have made. The other
consideration which is have a bearing on
the total identified tax pool will be the rate
of tax you pay.The amount of tax benefit you can expect
to acheive will vary dependent on the total
acquisition cost of your building together
with any subsequent improvements you
might have made. The other
consideration which is have a bearing on
the total identified tax pool will be the rate
of tax you pay.

Holiday home owners set to lose tax benefits

Holiday home owners set to lose tax benefits

Holiday Home Owners Set to Lose Tax Benefits

HMRC is consulting on its plans for new legislation to replace the current Furnished Holiday Lettings (FHL) regime. Rebecca Benneyworth looks at the current plans and offers her suggestions. Add your views here to influence the rules – consultation is open until 22 October.

The current tax rules allow furnished holiday letting to be treated as a “quasi trade”, with loss reliefs available as if the activity were a trade and a number of CGT reliefs applying to disposals. Those letting out homes can also claim plant and machinery allowances for expenditure on furniture and equipment under the Annual Investment Allowance.

The changes are needed because the regime needs to apply to the rest of the European Economic Area rather than the UK only. If extended as they currently stand, the FHL rules would be a serious drain on tax revenues as owners of holiday homes abroad offset any losses incurred against UK income.

Holiday homes are an important part of the UK tourist industry and provide jobs in rural areas throughout the country. The Treasury has a difficult task to come up with new legislation that satisfies Europe without damaging the UK economy, but also minimises the potential for inappropriate exploitation of the new rules.

The proposals

The latest FHL proposals [1] (1.9MB PDF) seek to tighten up the conditions under which the favourable tax regime can apply, and to modify the rules on loss relief as follows:

  • A qualifying property must presently be available for letting to the public for 140 days a year. It is proposed that this is increased to 210 days a year – 30 weeks.

  • A qualifying property must actually be let to the public for 70 days a year – this will increase to 105 days or 15 weeks.

  • Losses made in a UK or EEA FHL business will be restricted so that they can only be set against profits from the same FHL business. This ends the favourable loss relief available on FHL activities.

Other proposals formalise the treatment of capital allowances. Under the FHL rules, a property would need to be available for normal renting activity in order to claim capital allowances in the year; strictly there should be a disposal of the assets on which allowances are claimed, but no longer qualify. HMRC has taken a concessionary approach when a property fails to qualify for what is anticipated to be a temporary period, but this approach needs formalising.

The new capital allowance rules propose that the plant which qualifies under the FHL regime, but not under normal letting rules, is maintained in a separate pool or pools. No allowances are granted in periods for which the property does not qualify, but additions to and disposals from the pool are dealt with in the period, the written down value being brought “on stream” again when the property once again qualifies.

Practical problem 1: Availability and actually let changes

Increasing the available and actually let periods by 50% may not have a significant effect on those letting commercially, but may well eat into the time available to a family which occasionally lets out a holiday home. This approach seem appropriate, as the favourable tax treatment should really extend to those operating in this area as a commercial activity.

Families who rent out their holiday homes but are not able to meet the new higher letting rates would simply declare the income as rental income, and set any losses against their net rental income of the year of the loss and subsequent years.

Practical problem 2: Losses

No commercial operator goes into this business to make a loss. But keeping holiday properties which are solely for letting and not for family occupation up to the standard that guests expect is an expensive business. Properties have to be redecorated regularly, and guests expect high quality appliances and fittings, good quality linen and so on.

Domestic grade furniture is not robust enough to cope with holiday makers’ heavy use, so operators need to invest in hotel standard furnishings. A commercial operator faced with refurbishing several properties could well incur a loss. Restricting losses to FHL activities will bring down the cost to the Exchequer, but will put commercial operators in a worse position than a “pure” rental landlord who can set a loss on rental activities against other rental profits (segregating UK and non-UK rental businesses and the offset of losses).

Under the proposals, a commercial operator would not be permitted to set a loss on his FHL activity against any other pure rental profits – even those relating to FHL properties which have not met the relevant conditions in that year. Floods, foot and mouth disease and other complications could lead to losses for operators in the “wrong” area.

The losses issue made me wonder whether the new legislation is right for commercial operators of multi-property sites. Is it not time to recognise that what these businesses are doing is, in fact trading? A site with eight properties, tended by full time maintenance and cleaning staff and let throughout the year is surely a trade? I move that we come up with a clear definition of this activity and move it out of any concessionary treatment into full trading treatment.

The definition would need to be clearly drawn so that operators know which side of the line they fall (probably excluding owner occupation as a starter). These businesses would get the support they need, without extending the reliefs to those who are effectively letting an investment property.

What about single property owners, who represent an important part of the tourist business, but who do not fall into the trading definition? These new FHL proposals seem fair enough in that light – in exchange for favourable capital allowances and CGT treatment, these owners face a restriction on their losses if they incur any.

Practical problem 3: Capital allowances

For a single property owner, the proposal for a separate pool of expenditure which will only qualify if the FHL conditions are met seems a sensible one, and the simplest way to overcome the current practical problems with applying the strict letter of the law. Of course there may need to be two separate pools if the businesses has claimed allowances on integral features.

Provided the true trading businesses are segregated as outlined above, I would go further than the current proposals. Where assets are used in a tax year for letting which does not constitute FHL activity (due to the conditions not being met) I would suggest that the pool of expenditure is reduced in any event by a Writing Down Allowance, which is not available as a tax allowance, but reflects the non qualifying use of the assets concerned. Otherwise, eventually the owner will claim for the full cost of the assets, and no recognition of use for non-qualifying purposes will ever be made.

There is one major flaw, however, in the “notional pool” approach as the consultation document calls it. I would prefer to call it an actual separate pool – the FHL pool, as it is not really notional. If the owner has, say three properties in different locations, each of which may or may not qualify as FHL from one year to another, surely six separate pools will now be needed to reflect the need to claim allowances or not in respect of each property each year. This flaw is present irrespective of whether my suggestion that a WDA is applied in any event; I cannot see a solution to this and surely many will claim that this adds too much complexity.  I still think the separate pool idea is a very neat solution to the current problem, but it does present challenges of its own.

For further information on making a Capital Allowance claim on your Holiday let
Visit www.salmon-business.com for further information or call 01246 293011

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Owners of Overseas Properties are also urged to explore the possibility of claiming Capital Allowances against their tax liabilities before 2012.

Visit www.salmon-business.com for further information.

Become a Referral Agent for Capital Allowances

Become a Referral Agent for Capital Allowances

BECOME A CAPITAL ALLOWANCE REFERRAL AGENTS

A good accountant will openly admit that they don’t know everything about the vast intricacies of tax and VAT – A smart accountant will seek out the knowledge of those that do!

In order to fulfill all requests of a client every accountant from time to time will often seek out specialist help and advice. At Salmon Business, we offer a referral program where accountants can introduce their clients to our tax and VAT specialists safe in the knowledge that their clients will receive the most tax efficient information whilst at the same time receive a referral fee. This then allows accountants to concentrate on the elements they are more adept and qualified to working on.

For further details on how to become a referral agent for Salmon Business Group please call us anytime.

Call 01246 293011
Or visit www.salmon-business.com

Speak Online to a Capital Allowance Advisor now

Speak Online to a Capital Allowance Advisor now

Get FREE Advice now regarding the  Capital Allowance claim on your Commercial freehold property.

Do you just want to speak to someone right now without and get a straight answer about your claim?

To speak with one of our plain speaking advisors,  just click on the ‘Live Chat’ button below to speak with an advisor within 1 minute.

Within a few minutes we will be able to ascertain if you do have a claim that is worth progressing.  In the majority of cases owners of Commercial freehold properties are able to make a claim, this being the case, we would then arrange a suitable time to visit you and arrange for your FREE site survey.  The FREE site survey will allow us to ensure you fully maximise your Capital Allowance pool.

CLICK BELOW TO SPEAK WITH ONE OF OUR ADVISORS AND ARRANGE YOUR FREE SITE SURVEY

Alternatively, visit our web site at: www.salmon-business.com
Or call us direct on 01246 293011

Live Chat Help

Tax Benefits for Hotel and Guest House Owners

Tax Benefits for Hotel and Guest House Owners

Are You One of The Few Hotel Owners Who Haven’t Made Their Capital Allowance Claim?

Discover how your Hotel and Guest House hold the keys to unlocking £1000’s in overpaid taxes.

The results of making a Capital Allowance claim on your Hotel or Guest House will vastly reduce the amount of tax you pay on any profits you post in future years. In the majority of cases providing you have made a profit in the previous 2 years, a Hotel or Guest House will receive a lump sum of any overpaid taxes they have made.

Capital Allowances are a tax payers right! It is not an avoidance strategy.

It is estimated that 20-40% of a hotel’s fit out costs could qualify for capital allowances.  However, as of April 2012 these refunds will be reduced greatly as the tax system is being simplified and complex claims are going to be abolished.

The reference says the Conservatives aim to cut the headline rate of corporation tax to 25p and small company rate to 20p funded by reducing complex tax relief’s and allowances. –see http://www.conservatives.com/Policy/Where_we_stand/Business.aspx second point on their priority list!

Don’t miss out on these valuable tax advantages whilst they are still available to you – speak with an adviser today and arrange a FREE site survey NOW.

Your Capital Allowance pool can be locked in now and not drawn down until you need it.
REMEMBER THE CLAIM POOL WILL BE REDUCED IN 2012 SO BEST ACT NOW TO RECEIVE FULL BENEFITS.

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Contact Salmon Business Group today on 01246 293011
Alternatively, visit us at www.salmon-business.com

Capital Allowances

Capital Allowances

How Much is a Typical Capital Allowance Claim Worth?

Whilst every case is different, and each sector has its own expectations, as an average we would hope to identify additional capital allowances of some 20% – 35% of the freehold cost.

Below are some typical examples and amounts we have successfully processed.

benefits
OFFICES:
A claim in excess of £146,000.00 was acheived.
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benefits
CARE HOME:
A claim in excess of £374,000.00 was acheived.
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benefits
HOLIDAY PARK:
A claim in excess of £360,000.00 was acheived.
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benefits
CARAVAN PARK :
A claim to date for a single park was £1.8 Million
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benefits
HOTEL:
A claim in excess of £169,000.00 was acheived regarding an extension to the hotel. Our largest Hotel claim to date is £2.7 Million.
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benefits
DAY CARE NURSERIES:
A claim in excess of £62,000.00 was acheived.
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benefits
HOLIDAY COTTAGES:
A claim in excess of £126,000.00 was acheived. Our largest claim to date in this sector was £196,000.00
We will quickly identify the validity of a claim without obligation. If a claim does not proceed there will be no fee.

Your next step

To get a more accurate figure as to the amount you are entitled to please contact one of our Capital Allowance specialists where we can arrange a suitable time to visit you.

Call 01246 293011

Your next step
To get a more accurate figure as to the amount you are entitled to please contact one of our Capital Allowance specialists where we can arrange a suitable time to visit you.
Call 01246 293011
Britain becoming a less attractive place for the international super-rich, could prove a threat to the countrys fragile recovery.

Britain becoming a less attractive place for the international super-rich, could prove a threat to the country's fragile recovery.

Less Tax?

MONEY TALK by Ronnie LudwigSaffery Champness

The levy has, however, contributed to making Britain a less attractive place for the international super-rich, which could prove a threat to the country’s fragile recovery.

According to research conducted in March 2010 by Cass Business School, the non-doms spend a total of £19bn in the UK each year, as well as contributing £4.5bn in income tax and £3.75bn in VAT and stamp duty.

However, at least 2% of them have already left since the introduction of the £30,000 charge and associated changes brought about in the Finance Act 2008.

About 25% fewer are applying to move to Britain, according to the same research.

Arguably, the loss in demand for British goods and services could far outweigh the benefits of £130m collected through the additional levy.

The more likely course of action, though, would be for the government to tighten the rules and increase charges for non-doms as a result of their review.

Here again, the government will be faced with a difficult balancing act between maintaining that ‘open for business’ sign the chancellor wants to see over Britain, with bringing in additional tax revenue.

An attack on non-doms will have side effects and could mean overall tax take goes down, rather than up.

EVERY BUSINESS OWNER IN THE UK TODAY IS STRONGLY URGED TO SPEAK WITH A TAX SPECIALIST TO DISCUSS WHAT ENTITLEMENTS THEY CURRENTLY HAVE AT THE FINGER TIPS BEFORE THE GOVERNMENT PUTS A STOP TO EVERY BENEFICIAL TAX AID.

For further information on making your Capital Allowance claim and to arrange your FREE site survey, please visit our site www.salmon-business.com
alternatively, call one of our Capital Allowance specialists on 01246 293011.

Assisting Day Care Nursery Owners in Reclaiming and Reducing Their Taxes

If every nursery owner has a different idea of what their ultimate “Wish List” would look like (a list of educational equipment and safety features they would like to incorporate within their business), then they all certainly have the exact same obstacles in acquiring their list – this being the  NECESSARY FUNDS to pay for them!

IF ONLY WE HAD ENOUGH FUNDS TO BUY……….

The plain and simple fact is that the vast majority of day nursery owners do have access to £1000’s in the form of a tax rebate from years of overpaid taxes.

HOW TO RECOVER YOUR OVERPAID TAXES

The process of reclaiming your over paid taxes is available in the form of a Capital Allowance claim.  Capital Allowances have been created by the government and allows business owners the ability to offset taxable profits against the purchase of capital assets for your business, and a tax payers right to claim.  Providing you have paid tax on any profits you made within the last 2 years, then you will be entitled to make a retrospective capital allowance claim and receive a lump sum in the form of a tax rebate.  Also by making your capital allowance claim you will also automatically begin to reduce the amount of tax you pay in future years.

The result of your capital allowance claim will allow you to purchase your “WISH LIST”

Capital Allowances are somewhat of a specialised area, and in order to fully maximise your potential claim you are advised to seek specialised help and advice.

To arrange an informal meeting with one of our Capital Allowance specialists, please call us today on: 01246 293011, alternatively email sales@salmon-business.com

Further help and information may also be found on our web site at www.salmon-business.com

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