Late capital allowance change in Finance Bill

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Nick Huber
Freelance journalist
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The Finance Bill 2012 has relaxed some rules for claiming capital allowances for plant and machinery capital allowances on fixtures in a property but tightened others.

The Finance Bill – which enacts many of the measures in the 2011 and 2012 Budgets  - includes legislation that could potentially restrict claims for capital allowances for businesses that acquire a commercial property containing fixtures from1 April 2012 for companies or from 6 April 2012 for unincorporated businesses, according to SWAT UK.

Under the new capital rules when the seller has claimed capital allowances for fixtures, within two years of the transaction completion date the seller and buyer will need to satisfy one of two tests known as the “fixed value requirement”. This requirement can be met by the seller and the purchaser having agreed agreed the sales value of those fixtures, either by a “joint election” under s198 of the Capital Allowances Act 2001 or, if agreement cannot be reached, by going to the First Tier tax tribunal.

Some tax experts were worried that the fixed value requirement rule could mean that non-taxpayers, such as charities, may have scant knowledge or awareness of the capital allowances legislation and the procedures for  claiming allowances.

The latest Finance Bill includes a new amendment to simplify the paperwork for claiming tax relief on property fixtures.

If the owner of a property has “returned a specific disposal value for the fixtures, and that it is too late for the non-business purchaser to fix an apportionment with him, a narrowly defined exception from the normal rule now exists,” SWAT UK explained.

As in previous years, the sheer length of the 670-page Finance Bill means that tax experts are still sifting through it, although some concerns have already emerged. Despite the efforts of the Office of Tax Simplification the latest Finance Bill “must be one of the longest, if not the longest, on record,” the Chartered Institute of Taxation noted.

The House of Commons Treasury Committee has raised concerns about some of the new tax laws, including the retrospective use of tax legislation and the possibility that proposals for reforming of child benefit may make the system more complicated.


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30th Apr 2012 15:13

How will this actually help?

Let's see if I've got this straight ...

On the purchase of property, the buyer (the "current owner") can get a statement from the last taxpayer to have owned the property ("the past owner") - a person with whom he has never had a contractual relationship - of that person's CA disposal value. 

Who is going to give the information to the current owner?  The past owner has no reason to do it.  The past owner's accountant won't be allowed to do it (unless instructed to do so by his client).  The non-taxpayer vendor in the current sale - the awkwardly styled "purchaser from the past owner" probably doesn't have the details, as it had no interest in getting them in the first place.  It of course did have a contractual relationship with the past owner, but that may have been years and years ago, and again there is no reason for the past owner to release the figures now. 

Utterly useless. 

Thanks (1)
By plummy1
30th Apr 2012 16:06

A bit of a fudge

I think you could be right Alistair but this is the situation that many capital allowances claims companies face at the moment anyway in trying to establish what has been claimed for in the past. 

I think all this will just spell the importance of the commercial conveyancing solicitor giving the proper advice at the time of acquisition / disposal so that these issues are clarified and captured in a section 198 election agreement.  Even if the organisation is a non tax payer they will want to be able to pool the capital allowances just to be able to pass them onto a new purchaser,

I can't wait until April 2014 when the situation is going to become even more complex.


J Plumridge


Thanks (1)
30th Apr 2012 16:24

You are quite right, plummy1.  It is a common problem already, but my point was that this new "relaxation" is unlikely to help anyone. 

And yes, non-taxpayers such as pension funds and charities may well want to enter into S198 elections where there is a worthwhile amount of CA involved.  Just how important that will be in their purchase negotiations remains to be seen.  They will not benefit directly, after all. 

The concept of a non-taxpayer with no CA pool somehow pooling its expenditure is a bit odd, but I suppose it is clear enough what it means in practice!

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