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FHL capital allowances and late notification

Furnished holiday let partnership late registration effects on CA claims

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Can we claim capital allowances including AIA on a 2019 FHL partnership tax return which has only just notified HMRC of  chargeability? From a quick look it seems that the claim is only available on a tax return, so can we claim AIA to make a loss and carry it forward for each partner? Please note one partner has filed his 2019 return not declaring the FHL so his will be an amended return but the other partner had not registered for SA?

 

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By richard thomas
21st Oct 2021 10:24

You seem to have answered your own question. As you say, a claim for capital allowances including AIA must be made in the return (s 3 CAA 2001) so make the partnership return for 2019 (presumably 2018/19) and include the AIA in box 3.13A of Form SA700. I’m a bit puzzled about why you think you might not be able to do this.

As for the partner known to HMRC, they would I assume have said that they were not a partner, so would not have got the SA104 pages. I suppose that, technically, if there was a profit before CAs then they have omitted their share of the partnership profit, the CAs not yet having been claimed by the partnership. Once the claim is made by the partnership then the partner’s return will be correct, at least in the amount of income and of tax that is due. I note that the SA104 Notes do not cater for a case where the partner is not in possession of the partnership statement that the nominated partner should give them.

As to the c/f loss claim, the partners have four years to claim it. If the 2019 return was filed on or before 31 January 2020 it is too late to amend it. But there doesn’t seem to be any reason why the loss cannot be claimed by being entered in the 2020 SA104, rather than in the 2019 one.

Incidentally it is not a partnership that must notify chargeability, but each partner. Registering the partnership for SA is a different matter.

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By Tax Dragon
21st Oct 2021 10:41

Richard, can I just check with you... is one effect of s12D(2) TMA 1970 to render the condition in s3(3)(a) CAA 2001 satisfied?

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Replying to Tax Dragon:
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By richard thomas
21st Oct 2021 11:09

Yes it is. It's a natural effect of the deeming in s 12D.

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By Tax Dragon
21st Oct 2021 11:17

Thank you.

I think the use of the active voice in s12D throws me. I'm not sure why, but it seems to.

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Replying to richard thomas:
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By Di
21st Oct 2021 14:40

Thank you Richard, the reason why I was questioning the claim is the fact that CAs time limits is the normal time limit for making or amending a tax return. So the partner who is already under SA could not claim CAs in his own tax return as has already filed a 2019 tax return. I am hoping that the partnership can claim AIA for 2018/19 as the partnership has only just registered, I know late, so I just wanted to check that we would be able to claim through the partnership given the normal time limit has passed. Please note that it is a partnership, jointly held asset and joint business bank account.

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Replying to Di:
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By richard thomas
21st Oct 2021 18:16

The time limit for claiming a CA is the normal 4 year limit in s 42 TMA. The only method allowed to make the claim is in a return - the fact that the return is late is irrelevant as long as when the claim is included in a return the 4 years have not passed.

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By Tax Dragon
21st Oct 2021 11:27

Is it a partnership?

That's a question of fact, not a consequence of the different tax treatment afforded to FHL as compared with other property income.

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