The Finance Bill 2012 has relaxed some rules for claiming capital allowances for plant and machinery capital allowances on fixtures in a property but tightened others.
The Finance Bill – which enacts many of the measures in the 2011 and 2012 Budgets - includes legislation that could potentially restrict claims for capital allowances for businesses that acquire a commercial property containing fixtures from1 April 2012 for companies or from 6 April 2012 for unincorporated businesses, according to SWAT UK.
Under the new capital rules when the seller has claimed capital allowances for fixtures, within two years of the transaction completion date the seller and buyer will need to satisfy one of two tests known as the “fixed value requirement”. This requirement can be met by the seller and the purchaser having agreed agreed the sales value of those fixtures, either by a “joint election” under s198 of the Capital Allowances Act 2001 or, if agreement cannot be reached, by going to the First Tier tax tribunal.
Some tax experts were worried that the fixed value requirement rule could mean that non-taxpayers, such as charities, may have scant knowledge or awareness of the capital allowances legislation and the procedures for claiming allowances.
The latest Finance Bill includes a new amendment to simplify the paperwork for claiming tax relief on property fixtures.
If the owner of a property has “returned a specific disposal value for the fixtures, and that it is too late for the non-business purchaser to fix an apportionment with him, a narrowly defined exception from the normal rule now exists,” SWAT UK explained.
As in previous years, the sheer length of the 670-page Finance Bill means that tax experts are still sifting through it, although some concerns have already emerged. Despite the efforts of the Office of Tax Simplification the latest Finance Bill “must be one of the longest, if not the longest, on record,” the Chartered Institute of Taxation noted.
The House of Commons Treasury Committee has raised concerns about some of the new tax laws, including the retrospective use of tax legislation and the possibility that proposals for reforming of child benefit may make the system more complicated.