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Second Hand Fixtures

Second Hand Fixtures

My client is in the process on purchasing a second hand commercial building within which are contained a number of integral fixtures such as lifts.

The seller is a property developer and as such has held the property in trading stock throughout the ownership period (owned since pre April 2012).  Therefore no capital allowances have been available to be claimed by the seller.

Upon purchase, my client would like to claim capital allowances however the legislation contained within FA2012 must be considered for himself (and future potential claimants) however it is not clear to me what the requirements are in this situation.

No valid S198 election is possible as the seller was not entitled to claim capital allowances and so brings no disposal value in under CAA2001 S196 however where does this leave my client, the purchaser in respect of future claims and expenditure to claim allowances on?

The seller previusly bought the property from a receivor and to their knowledge no one previously has claimed capital allowances on these fixtures, however this is not known with any certainty.

Is it just a matter of obtaining a fair value apportionment of the fixtures value and then allowances are available to the purchaser on this value?  Is this the only requirement even though it is not known whether any claims have previously been made?

Thanks in advance for any thoughts.....


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By plummy1
24th Apr 2013 19:50

Did you get an answer?

I just wondered whether this question was ever answered and if so were you able to go ahead with a capital allowances claim and on which basis?

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12th Dec 2013 15:42

Fixed value requirement


Hi Pjones & Plummy,

The main part of 187a to watch for is the Fixed Value Requirement 187a(5). This reads as follows,

“The Fixed Value Requirement applies if the past owner is or has been required (as a result of having made a claim in respect of the historic expenditure) to bring the disposal value of the plant and machinery into account in accordance with items 1, 5 or 9 of the Table in section 196”

If the property was held as trading stock throughout the period of ownership by the previous owner , then no disposal value is required to be brought into account. Therefore the Fixed Value Requirement does not need to be satisfied due to no requirement for a disposal value under s188, s190 (relevant reference to types of disposal covered in s196(1), (5) & (9)).

There is also the Disposal Value Statement Requirement (a catchy name if ever I say one in legislation) this works in conjunction with the Fixed Value Requirement to catch several rare forms of transaction not within the scope of the Fixed Value Requirement. This similarly refers to disposal values in the table under s196 items 2 and 3 (also table under s61 item 7). These bring us back to s188 which deals with scenarios where there is a loss (sale) of a qualifying interest. Held under stock there was no qualifying interest and therefore the disposal value statement requirement does not apply.

All of the above is a very long winded way of saying that yes you are correct. An apportionment under s562 is possible. A review of the tax history of the building back to 1996 would need to be undertaken as it is the taxpayers responsibility to show they are entitled to claim. They would be restricted by past owners disposal values if claims have been made in the past on fixtures that are still in the building.

I hope this has answered your question (apologies if it is a little late). We are heavily involved in this area and would be more than happy to answer any further questions you have.

Kind regards

Andrew Stanley


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