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Capital Allowance Query

Capital Allowance Query

Seeking clarity

Is there any correlation and calculation between the purchase cost of Guest House (Apr2008) £359 (£294K heritable , £40K goodwill , £25K fixtures/fitting ) and claim for qualifying embedded fixtures , if the purchase cost is used in any claim calculation then I assume £40K goodwill and £25K f/f are exempt from any computation ?

Thanks

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11th Jan 2019 07:45

Happy to answer if you explain your question better.

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to tonycourt
11th Jan 2019 10:07

Thanks tonycourt

Embedded fixtures Capital Allowance claim on Guest House purchased 2008 for £395K, is any current written down relief ie £40K goodwill and £25K subtracted from the total purchase consideration for calculation of qualifying items ? Thanks

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11th Jan 2019 09:28

Like you, we seek clarity.

I note the word "heritable" - is this a Scottish question ?

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11th Jan 2019 10:13

Hi lionofludesch,

The property is located in Scotland, Ive rephrased my question in a reply to tonycourt, any help appreciated.

Thanks

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11th Jan 2019 10:45

@GANDONAS

It's still not terribly clear what the position is and what you're asking.

I'm guessing that:

1. the property has been sold or is about to be sold.

2. it was bought as part of a business, a guesthouse, the costs being as shown in your posts.

3. the business has ceased and therefore the property is being sold without the goodwill.

If you can confirm or correct my guesswork and answer the following question, I can answer your questions.

Is the property being sold to be used as a business premises or a private home?

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to tonycourt
11th Jan 2019 10:56

I think he just wants to put in a claim for capital allowances on the embedded fixtures and has some formula that starts with the cost of the building.

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to Duggimon
11th Jan 2019 11:23

Many thanks Duggimon,

Indeed, consideration of capital allowance claim for integral features, therefore trying to understand what the calculation does and does not entail, maybe I should have asked that first !

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to tonycourt
11th Jan 2019 11:15

Apologies tonycourt,

The guest house is currently running as a commercial trade and we wish to consider a Capital Allowance claim for embedded integral features. Meaning we are trying to understand how the property would be apportioned with respect to claiming identifying items.

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to tonycourt
11th Jan 2019 11:24

Clarity ?
Consideration of capital allowance claim for integral features, therefore trying to understand what the calculation does and does not entail, maybe I should have asked that first !

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11th Jan 2019 10:55

I would be wary of making this claim, £25K seems quite a chunk for F&F if it doesn't include any embedded fixtures.

If asked, would you be able to provide a list of assets transferred with the business, separate to the embedded fixtures, to justify that amount?

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to Duggimon
11th Jan 2019 11:21

Thanks Duggimon
£25K was the f/f chunk apportioned to the sale in 2008, currently written down to £11K, just trying to ascertain what values are used when establishing qualifying items
relevant to embedded fixtures claim, ie bricks and mortar (including integral features ) only, therefore no goodwill or f/f enters calculation ? Cheers

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to GANDONAS
11th Jan 2019 11:28

If you're looking for some simple "x% of cost of property = embedded fixtures" formula, there isn't one.

You need to value all these assets individually. If you've no experience of this, it might be worth engaging a specialist valuer.

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to lionofludesch
12th Jan 2019 16:31

Thanks lionofludesch,

Thats exactly what confuses me as this query results from a specialist valuation whereby £100K of qualifying items were identified from £400K, all fine and well. However when it was highlighted for the sake of paperwork accuracy, that the purchase cost was actually £360K, all previous qualifying items in the main and special rate pool were reduced by a percentage across the board. How can this be ? I would have thought that once the features and value were identified by survey they would be final and any change in the purchase price would be irrelevant to the claim. I would value your thoughts and anyone else for that matter please ?

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to GANDONAS
12th Jan 2019 16:46

I agree with you.

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to lionofludesch
12th Jan 2019 17:10

Many thanks, certainly aids my thoughts about the validity of the claim. Best Regards.

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11th Jan 2019 11:36

@GANDONAS

Thanks - Am I right assuming that no election (s.198 CAA) was made? Were the fixtures detailed in the sale/purchase contract?

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to tonycourt
11th Jan 2019 12:07

@tonycourt

No election was made at point of sale, loose chattels only were specified by virtue of a vendors inventory, apportioned £25K

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11th Jan 2019 16:49

The apportionment to calculate the value of the fixtures ought to be applied to the £294k heritable cost. There will almost certainly be a valid claim for the pre-commencement integral features as your client (acquiring in April 2008) is probably the first person to incur capital expenditure on those items (assuming also that your client is unconnected to seller). As for other P&M fixtures at the property, again the apportionment would use the same £294k heritable cost, but the availability of allowances would depend upon whether the seller or any former owner had claimed and/or retained allowances before this acquisition. a good CA specialist would be able to sort this out for you, although the benefits will not be great in comparison to the cost of carrying out the valuation.

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