After failing at and early age to make a living by playing guitar, I started a career helping clients to save money and become more efficient. In 2009 I set up Curtis Plumstone Associates to concentrate on undertaking Capital Allowances Claims on Commercial Property. My business partner is a Deloittes trained expert in this field and my job is to keep him as fully employed as possible on projects large and small.
My understanding is that each year the married couple can elect to split the profits in the most tax efficient way possible. Another tax plus for running furnished holiday lets. Have they claimed "plant and machinery fixtures" on the property or at least explored this avenue for further potential tax savings?
There is total flexibility in allocating the profits from an FHL when it is owned by a married couple i.e. they can be allocated up to 100% to either partner depending on what is most tax efficient.
This being the case I don't believe that their CGT position on disposal will be treated differently i.e. they will be treated as jointly having run the FHL.
"Counteraction where arrangements are contrived etc
(1)Any relevant tax advantage that would (in the absence of this section) be obtained as a result of relevant arrangements is to be counteracted by the making of such adjustments as are just and reasonable.
(2)A tax advantage is “relevant” if that advantage is connected with a super-deduction or an SR allowance (for example, the obtaining of such a first-year allowance or the avoidance of a balancing charge under section 12 or 13).
(3)Arrangements are “relevant” if—
(a)the purpose, or one of the main purposes, of the arrangements is to obtain a relevant tax advantage, and
(b)it is reasonable, taking account of all the relevant circumstances—
(i)to conclude that the arrangements are, or include steps that are, contrived, abnormal or lacking a genuine commercial purpose, or
(ii)to regard the arrangements as circumventing the intended limits of relief under CAA 2001 or otherwise exploiting shortcomings in that Act....."
From the above I would say that unless you have a valid reason to shorten the tax year other than creating a tax advantage from the SR you should not do it. I think HMRC we be looking out for this given you are not going to be the only one looking for a tax advantage for their client.
I would speak to Ben Gander at Gander Tax Services. If he doesn't know himself I'm sure he will be able to recommend someone. We direct our clients to him when it's outside our expertise.
If you pay tax in the UK you can't claim depreciation but you may be able to claim capital allowances on the property for the"Plant & Machinery Fixtures' it contains e.g heating, lighting sanitary wear etc.
Making these calculations and producing a report is a specialist exercise and therefore requires a specialist. Please feel free to contact me to discuss in more detail as this is area of expertise.
If you pay tax in the UK you can't claim depreciation but you may be able to claim capital allowances on the property for the"Plant & Machinery Fixtures' it contains e.g heating, lighting sanitary wear etc.
Making these calculations and producing a report is a specialist exercise and therefore requires a specialist. Please feel free to contact me to discuss in more detail as this is area of expertise.
Before transfering don't forget to investigate whether there has been a capital allowances claim for "P&M Fixtures" in the property. If a claim hasn't been made then it needs to be looked at so that a) the partnership benefits from any allowable capital allowances b) the correct balance of capital allowances are transferred into the limited company.
If not considered now it may be too late to correct this further down the line.
HMRC have recognised the issue with aggressive R&D claims. I understand from a contact in one firm that they are now facing a lot of clarifications questions from HMRC and claims are no longer going through on the nod. I think some cowboys will soon be run out of town.
Just to reiterate something said previously there is no reference to Serviced Accommodation in the capital allowances act but there is reference to furnished holiday lets. Therefore it is important to check whether the properties concerned are going to meet the standard required to qualify as a furnished holiday let. This could be an important factor as if they don't qualify then capital allowances will be unlikely to be claimable. HMRC issue a guidance leaflet which from memory is reference HS 253 regarding furnished holiday lets.
Just a question. Of the £800k expenditure was none of it Integral Features? Just checking as you haven't allocated anything to the Special Rates Pool which seems unusual.
My answers
My understanding is that each year the married couple can elect to split the profits in the most tax efficient way possible. Another tax plus for running furnished holiday lets. Have they claimed "plant and machinery fixtures" on the property or at least explored this avenue for further potential tax savings?
There is total flexibility in allocating the profits from an FHL when it is owned by a married couple i.e. they can be allocated up to 100% to either partner depending on what is most tax efficient.
This being the case I don't believe that their CGT position on disposal will be treated differently i.e. they will be treated as jointly having run the FHL.
From the above I would say that unless you have a valid reason to shorten the tax year other than creating a tax advantage from the SR you should not do it. I think HMRC we be looking out for this given you are not going to be the only one looking for a tax advantage for their client.
I would speak to Ben Gander at Gander Tax Services. If he doesn't know himself I'm sure he will be able to recommend someone. We direct our clients to him when it's outside our expertise.
Hi,
If you pay tax in the UK you can't claim depreciation but you may be able to claim capital allowances on the property for the"Plant & Machinery Fixtures' it contains e.g heating, lighting sanitary wear etc.
Making these calculations and producing a report is a specialist exercise and therefore requires a specialist. Please feel free to contact me to discuss in more detail as this is area of expertise.
John.
Hi,
If you pay tax in the UK you can't claim depreciation but you may be able to claim capital allowances on the property for the"Plant & Machinery Fixtures' it contains e.g heating, lighting sanitary wear etc.
Making these calculations and producing a report is a specialist exercise and therefore requires a specialist. Please feel free to contact me to discuss in more detail as this is area of expertise.
John.
Before transfering don't forget to investigate whether there has been a capital allowances claim for "P&M Fixtures" in the property. If a claim hasn't been made then it needs to be looked at so that a) the partnership benefits from any allowable capital allowances b) the correct balance of capital allowances are transferred into the limited company.
If not considered now it may be too late to correct this further down the line.
HMRC have recognised the issue with aggressive R&D claims. I understand from a contact in one firm that they are now facing a lot of clarifications questions from HMRC and claims are no longer going through on the nod. I think some cowboys will soon be run out of town.
Just to reiterate something said previously there is no reference to Serviced Accommodation in the capital allowances act but there is reference to furnished holiday lets. Therefore it is important to check whether the properties concerned are going to meet the standard required to qualify as a furnished holiday let. This could be an important factor as if they don't qualify then capital allowances will be unlikely to be claimable. HMRC issue a guidance leaflet which from memory is reference HS 253 regarding furnished holiday lets.
Just a question. Of the £800k expenditure was none of it Integral Features? Just checking as you haven't allocated anything to the Special Rates Pool which seems unusual.