Why don't accounting routines maximise Capital Allowance claims?

14th Dec 2020
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For many businesses, this may be the toughest time we’re experiencing to date as the pandemic poses new problems for businesses, creating increasing financial distress and complex challenges.  In turn, the demand for help is critical.

Many individuals and businesses who are entitled to claim Capital Allowances from the commercial properties have not claimed their full entitlement and as a result, have missed out on maximising their tax relief.

Capital Allowance Review Service can support you and your clients in these trying times by helping businesses to maximise tax relief and build cash flow.  Capital Allowances can be and are being utilised to generate a substantial tax saving and/or welcomed cash injection to relieve those cash flow pressures.  We have therefore made structural changes to our fee model to ensure that our clients reap the benefits of a capital allowance claim over the short and longer-term.

We find the most efficient way of assessing whether tax savings can be achieved is through a conversation with accountants.

Why don’t accounting routines maximise Capital Allowance claims?

There’s no doubt accountants have an established routine for assessing Capital Allowances and therefore it’s important to stress that we’re not questioning their or your ability. We look to enhance the level of Capital Allowances claimed by introducing additional disciplines that add value to the accountant’s work. For example, a survey is completed on the property to identify items that are not visible within the paperwork and sit within Land & Buildings on the Balance Sheet (not Fixtures & Fittings). Stage Payments for leasehold improvements or property builds are a good example of where our process creates the required detail to maximise Capital Allowances.

Is now a good time to review your client’s capital expenditure?

You may have information about Property Embedded Capital Allowances but you’re not sure whether you’re comfortable with progressing a claim.

It is natural to have some uncertainty/nervousness about our expertise and quite often think it’s too good to be true.  This is why our approach over the past 19 years has been to support advisors across the UK, creating trusted relationships.  We look to confirm, with certainty, that a claim is possible before progressing the practicalities of the process.  This confirmation is shared with clients and their advisors to ensure all parties are comfortable with our approach.

We’ve heard of other accountants that haven’t had a good experience with other firms as well as fees that were not transparent.

Although we have operated for many years and achieved testimonials on our website, we have recently started to build our Google reviews.  This is proving to be a great way of giving clients and advisors some reassuring reading.  We maintain a ‘no win, no fee’ fee structure with no upfront costs, giving clients the peace of mind that they are not exposed to any risk in progressing a review.  It’s just as important that both long-term and short-term benefits are considered when reviewing the client’s tax profile and cashflow.  This is completed at the start of our process as to how the tax benefit is crystalised through Capital Allowances can differ from one case to the next.

How do I know if this is something my clients can benefit from?

We would encourage you to complete a review if you answer yes to both of the following questions:

1 – Has your client spent significant capital buying and/or improving a commercial property that is in use for the purpose of trade or rental business?

2 – Is the entity that spent the capital paying or liable to UK tax i.e an individual, a company, partnership, overseas landlord, etc?

Could your clients be missing out on valuable tax relief?  See savings chart for approx. value of tax savings. 

Property Purchase Price Property Embedded Fixtures & Fittings Available (20%) Savings if liability to tax is 19% Savings if liability to tax is 20% Savings if liability to tax is 40%
£300,000 £60,000 £11,400 £12,000 £24,000
£500,000 £100,000 £19,000 £20,000 £40,000
£2,000,000 £400,000 £76,000 £80,000 £160,000
£10,000,000 £2,000,000 £380,000 £400,000 £800,000
No Maximum        

20% is typical but amounts may vary.  The majority of these figures are written down within 5 years.

Capital Allowances do not only apply to freehold property. If you have completed leasehold improvements or incurred significant costs extending or refurbishing a property you have owned for a number years, these costs could also qualify for tax relief.

Still not sure whether to progress a claim?  Contact us to find out how we can help your clients to save tax, 01782 749842.

C.A.R.S will continue to maximise capital allowance claims and complete review throughout lockdown.