Steven Bone is a tax-qualified chartered surveyor and director of The Capital Allowances Partnership Limited.
Thanks for the recommendations, much appreciated. atleastisoundknowledgable please feel free to PM me or get in touch via the details on our website.
How about ....
A no-poach agreement.
Buyer Beware ...
Thank you for the positive mentions above. The Capital Allowances Partnership Ltd has a couple of articles about this on our website:
The first is general guidance about choosing a capital allowances adviser: http://www.cap-allow.com/service-choosing-an-advisor.php
The second discusses the risks of appointing some advisers (not named or implied) http://www.cap-allow.com/target-too-good.php
Plummy1 - thank you for the mention.
It is also worth noting that when CAA 2001 was written the Explanatory Notes (Annex 1, Change 8) said "... nothing in clause [that is, now CAA 2001 section] 58 requires a person who would like to claim capital allowances to allocate the expenditure to a pool for the chargeable period in which the expenditure is incured. The taxpayer is allowed to allocate expenditure to the pool for a later period. Most taxpayers are likely to want to allocate expenditure to the pool as soon as possible. But providing the flexibility could for example help a taxpayer who has inadvertently failed to include expenditure for the earliest possible period."
My colleagues and I have also had plenty of experience 'educating' HMRC staff in basic capital allowances matters, but found the Head Office specialists to have a sound grasp of the subject (albeit rarely as 'helpful' a mindset as the taxpayer might like!).
There is some guidance about this
The UK tax profession 'Engagement Letters for Tax Practitioners' guidance (endorsed by all the relevant professional bodies) says
"The covering letter or the standard terms and conditions should make clear when an engagement begins and when it ends. Practitioners should not cease to act for a client without giving them notice in writing, unless compelled to do so by law." (para 82)
The example 'Standard Conditions & Terms of Business' (Appendix C) includes the following provision:
"Unless otherwise agreed in the engagement covering letter our work will begin when we receive your implicit or explicit acceptance of that letter. Except as stated in that letter we will not be responsible for periods before that date.
Each of us may terminate this agreement by giving not less than 21 days notice in writing to the other party except where you fail to cooperate with us or we have reason to believe that you have provided us or HMRC with misleading information, in which case we may terminate this agreement immediately. Termination will be without prejudice to any rights that may have accrued to either of us prior to termination.
In the event of termination of this contract, we will endeavour to agree with you the arrangements for the completion of work in progress at that time, unless we are required for legal or regulatory reasons to cease work immediately. In that event, we shall not be required to carry out further work and shall not be responsible or liable for any consequences arising from termination." (para 20)
Capital Allowances Manual
HMRC publishes its capital allowances manual online http://www.hmrc.gov.uk/manuals/camanual/index.htm
Otherwise your best bet is a book on the subject (I must declare an interest because I co-author the first one), for example:
WILSON M. & BONE S. Capital Allowances: Transactions & Planning, Bloomsbury Professional (see http://www.bloomsburyprofessional.com/1207/Bloomsbury-Professional-Capital-Allowances--Transactions-and-Planning-2010-11.html)
CHIDELL R. Capital Allowances, CCH
Pevious editions of these two books were compared by AccountingWeb's Nicola Ross-Martin in February 2008 (see https://www.accountingweb.co.uk/item/178957) who concluded:
"I am not going to stick my neck out and declare a winner between these two books/manuals for the simple reason that I find that they are both excellent, and highly addictive in a knowledge hunting sort of way. I have found myself using both at once without even thinking about it. Once you know your way around each, which is not difficult, they do genuinely compliment each other."
Capital Allowances Books
Two capital allowances books worth considering are (see review at https://www.accountingweb.co.uk/cgi-bin/item.cgi?id=178957&d=1032&h=1019&f=1026)
Review - Nichola Ross Martin, Accounting Web, Feb 2008 "I am not going to stick my neck out and declare a winner between these two books/manuals for the simple reason that I find that they are both excellent, and highly addictive in a knowledge hunting sort of way. I have found myself using both at once without even thinking about it. Once you know your way around each, which is not difficult, they do genuinely compliment each other."
1. (apologies for plugging this book, which I co-author) Tottel's Capital Allowances: Transactions & Planning written by Martin Wilson & Steven Bone and published by Tottel Publishing
Review - Nichola Roass Martin, Accounting Web, Feb 2008 "It tackles capital allowances in an original and enthusiastic way ... As well as looking at the nature of plant and the detail of each form of capital allowance this manual approaches things in a very different way to the norm; it looks at planning points and claims on a transactional basis ... This manual contains a myriad of practical detail and will easily earn back its cover price."
Review - Rebecca Cave in Taxation magazine, Dec 2007 "I recommend this book ... It is set out by transaction rather than tax relief so you can go directly to the chapter that deals with the transaction in front of you ... Overall the book is written with the busy practitioner in mind"
Review - John Jeffrey-Cook in the Institute of Chartered Accountants Tax Faculty's 'TAXline' newsletter, Nov 2007 "comprehensive and practical"
2. Capital Allowances written by Ray Chidell and published by CCH
Review - Nichola Ross Martin, Accounting Web 2008 "There is a lot more to the manual, than an A to Z of the most commonly seen items of plant and machinery as you might imagine ... The style is easy going and it constantly provides thorough examples to back up the text. It deals with the sometimes trick areas of integral fixtures, elections and buying and selling property in a very clear way, and this is another reason why I would rate this book so highly. In an ideal world we would all have time to read this sort of book from cover to cover, but that is not possible with the volume of ever changing legislation that we have at the moment, unless of course you are a specialist or tax writer. However, you can dip in and out of this book with ease thanks to its great index, and it will easily out earn you its recommended retail price and remain an asset for any accountancy practice."
Or if it helps, claiming capital allowances is not mandatory. So the qualifying expenditure may be added to the pool, but the allowances wholly or partly disclaimed, see CAA 2001 s52(4) [first year allowances] and s56(5) [writing down allowances]. The unrelieved qualifying expenditure is then carried forward (indefinitely, if allowances continue to be disclaimed in later periods) and the writing down allowances may be claimed in any later period, when needed.
If allowances have already been claimed in the tax return, this may be amended or withdrawn within two years from the end of the accounting period when the expenditure was incurred.
The Capital Allowances Partnership LLP (www.cap-allow.com)
Co-author of Tottel's Capital Allowances: Transactions & Planning and Tolley's Tax Planning 2007-08
Capital Allowances for Pubs
Shaun, I'm co-author of the Tottel's capital allowances book that Nichola kindly recommended. In our wide specialist experience, it is fair to say that capital allowances are all too often underexploited by the pub industry, especially when owned by businesses other than the large chains. I would be happy to have a chat with you about the opportunities to help your clients.
How it would work ...
We have heard public confirmation from an HM Revenue source (who should know), that HMRC will NOT be sympathetic to any attempts to reclassify expenditure from IBAs/ABAs to plant and machinery (P&M). That does not of course mean it cannot be done, but it has to be done within the rules.
1. Time limit for claim - You are correct about the time limits to make or amend a capital allowances claim. It should be possible to go back and reclassify any additions within that timeframe by submitting an amended tax return. The same should also be possible for any earlier periods' returns that are still under enquiry. If a return is amended, then all brought forward amounts will have to be changed in subsequent periods' returns.
2. Error or mistake claims - Errors of judgement are not protected, so where a deliberate choice has been made between two alternatives (such as claiming IBAs or ABAs instead of P&M) in HMRC's view there is no error or mistake. And no relief is available if the return was made in accordance with the practice generally prevailing at that time. Therefore, (particularly in light of HMRC's expected unsympathetic stance) it is highly unlikely that HMRC will accept error or mistake claims to reclassify IBA or ABA expenditure to P&M.
3. Disclaimed allowances - If (rarely) IBAs or ABAs have been disclaimed it should be straightforward to unwind these in open returns & claim the writing down allowances within the allowed time limits by submitting amended returns as discussed above (or reclassify any P&M). Otherwise, we would have serious reservations about effectively pretending that IBA or ABA claims (made in the IBA or ABA box) were actually partially disclaimed P&M claims, as you seem to be suggesting.
4. Property transfers - It may in theory be possible (subject to the usual provisos about needing valid commercial reasons etc.) to 'refresh' expenditure that was previously added to an IBA or ABA pool, so that P&M allowances may be claimed going forward. However, it would appear to be necessary to transfer the relevant interest intra-group and the P&M claim would then be restricted to the attributable portion of unrelieved expenditure (for IBAs by s186 CAA 2001).
We are also aware of artificial arrangements (in our view normally ineffective for a multitude of reasons) being promoted by some advisers that rely on numerous existing group companies with different year ends and repeated intra-group transfers of industrial property to accelerate writing down allowances before IBAs are phased out.
The Capital Allowances Partnership LLP (www.cap-allow.com)
Co-author of Tottel's "Capital Allowances: Transactions & Planning" and Tolley's "Handbook on The Capital Allowances Act 2001" and "Tax Planning 2007-08"