I'm selling a former fish and chips shop. The former tenants left some catering equipment, frying ranges, extractors, sinks, fix seating when they vacated.
The new buyers want to allocate capital allowance of £6000 of the property purchase price for the fixtures and fittings.
Is this allowed as I have never run the business only rented out the property. Do I have to give the buyers a capital allowance or can I refuse to give them the allowance.
Replies (13)
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You’re definitely getting battered.
When the chips are down, you really need professional advice.
If you try and sort it out yourself, it’ll give you a haddock.
The buyer benefits from extra CA's and lower SDLT, so ask them for a higher price to acquire the property.
As seller you risk higher tax on the £6k capital allowance (i.e. trading income not a gain), so you may want to tell them you don't agree without splitting the tax costs/benefits more fairly.
The request is based on buyer looking to to get a better positin and is in effect part of a negotiation
Let your accountant look at the position and advise the consequences
You really should have addressed this before advertising
Were contents considered as part of the pricing?
Every buyer will want to do that your buyer is requesting
Agree with others F&F is often a negotiating tool between buyer and seller. You may wish to check the requirements of 'pooling' too (or your accountant can advise). You may even be carrying forward unused pools from your initial property purchase.
From what you have mentionned, some of these items are clearly F&F. I'd question whether some are - in fact - chattels. You, or your solicitor should have provided a list of excluded chattels in this case. Some of the chattels may be excluded and 'extra' to the agreed purchase (although, you have to then decide if you really want the 'catering equipment').
The other question is whether you, indeed, own what you are selling?! You state the items were left by the previous tenant but, did you have a right to ownership (or, indeed, did you exercise that right) on vacation? Again, one for your solicitor, and one for your accountant to review once your solicitor has advised.
If advising you (which I'm certainly not) I'd likely have many more questions based on your specific circumstances. None of those can be covered in an online forum!
You need to refer to your accountant and solicitor - or better still, get the 2 professionals to talk to one another (which is what I usually do). Your accountant will understand the tax (and a bit of the law), your solicitor will understand the law (and a bit of the tax), rarely will you find one who does both (you would, but this would be reflected in fees).
You can refuse - but maybe the buyer will resile from the purchase.
The way you phrase your query suggests that you don't particularly understand the issues and would benefit from professional advice.
As you have not incurred the expenditure on the items you listed you have no right to "pool" the allowances and pass on the benefit. In the circumstances I would sell the property without the right to claim capital allowances. The buyer is getting the benefit of the equipment after all if they are going to use it.