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SBA

Treatment on sale

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This article https://www.accountingweb.co.uk/tax/business-tax/structures-and-buildings-allowance-what-you-need-to-know

suggests that SBA allowances claimed (claimable?) will be deducted from CGT base cost on a sale of the property. Is that correct?

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By Tax Dragon
10th Feb 2020 07:01

I thought the allowances were simply clawed back (but I've not yet been excited enough about them to read the legislation!) Deducting the allowance from base cost seems a weird way to achieve a clawback [rollover relief?]. I'm intrigued enough to follow this thread (sorry not to be more useful) and maybe even to look up the law.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
10th Feb 2020 07:50

No - one of the features that I do know is that there is no balancing adjustment on a sale.

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Replying to Wilson Philips:
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By Tax Dragon
10th Feb 2020 09:26

Well now I'm confused.

Croner-i says the CGT base cost is reduced. Connected persons aside, s39(3B) seems to say the exact opposite.

What is it about you, me and s39??

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Replying to Tax Dragon:
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By carnmores
10th Feb 2020 10:04

LOL

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Replying to Tax Dragon:
Lone Wolf
By Lone_Wolf
10th Feb 2020 11:25

I've just checked Croner-i and it seems pretty certain on the point:

"In terms of the chargeable-gains computation on a disposal, the seller’s allowable costs are to be reduced by the SBA claimed. This will happen regardless of whether there is a gain or loss. This differs from the existing rules where there is no requirement to bring capital allowances into account in a capital-gains computation unless there is a loss (see ¶524-300ff.)."

But as you point out, that's not what the legislation seems to say at s39(3B):

"This section is not to be taken as excluding, from the sums allowable under section 38 as a deduction in the computation of the gain, any expenditure in respect of which an allowance under Part 2A of CAA 2001 (structures and buildings allowances) is made."

s39A has an exclusion, but that only applies in particular circumstances involving connected persons, so it looks like the article, and Croner-i, are wrong. Unless we are missing something of course.

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Replying to Lone_Wolf:
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By Tax Dragon
10th Feb 2020 11:42

Seems we're howling from the same hymn sheet, old non-friend.

I still need more coffee though - really can't get into it today.

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Lone Wolf
By Lone_Wolf
10th Feb 2020 11:37

Looks like TCGA 1992 s37B is the culprit. Rather than reducing the base cost as the article suggest, the consideration for the disposal is treated as being increased by an amount equal to the amount of SBA that has been claimed. Same effect though.

A strange way to go about it in my mind, specifically allow the cost in s39, only to claw it back with s37B.

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Replying to Lone_Wolf:
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By Tax Dragon
10th Feb 2020 11:46

Good hunting.

Must be some reason for that approach. It's not immediately obvious to my fuddled brain.

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Replying to Tax Dragon:
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By Tax Dragon
10th Feb 2020 11:47

Oh, wait - have I already said it? Roll-over relief.

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Replying to Lone_Wolf:
Psycho
By Wilson Philips
10th Feb 2020 12:09

Most grateful.

Apart from a fairly minor cash flow advantage, therefore, it would seem that in many cases the SBA is of b*gger all use overall.

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Replying to Wilson Philips:
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By Tax Dragon
10th Feb 2020 12:11

That's why I hadn't been excited enough to learn about it... until today.

I suppose I should be grateful.

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