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Member Article

Businesses could lose significant tax allowances unless prompt action is taken, as new rules become law

New rules come into effect from April 2014 regarding capital allowances for commercial buildings. Anyone who has recently sold or purchased a commercial property, or is planning to do so in the future should contact a capital allowances specialist or risk losing substantial tax relief once and for all.

Louise Barth, Vice President of Capital Allowances at Altus Edwin Hill explains:

“A ‘two-pronged’ approach was written into the 2012 Finance Bill to ensure that HMRC does not give allowances more than once for fixtures included within the sale of commercial buildings.

“The first ‘prong’ a fixed-value requirement came into effect in April 2012, this meant that when a seller has claimed capital allowances on assets within a property they are disposing of, a fixed value must be agreed between the buyer and the seller for those fixtures.

“The second ‘prong’ will see the full effect of the legislation come into force in April 2014. If the seller has not made a capital allowances claim but is entitled to, then the seller is required to ‘pool’ the capital allowances and declare this in order for a buyer to claim it. Failing to do so within a prescribed time limit will invalidate all future claims on these assets.

Depending on the building, these fixtures could be up to 30% of the property value, so we are talking about significant allowances or a potential devaluation of the building, where previously the buyer would have benefited from the seller’s oversight.“

Louise Barth added: “If addressed properly, a seller could realise a greater value for their property. Previously, valuable fixtures may have been overlooked, allowing a purchaser to claim them fully. Under the new legislation, it now becomes the responsibility of all parties involved to ensure capital allowances are claimed correctly and not lost for all future owners. It will now be in the interest of all parties to work a clause into the contract pre-sale, so that any capital allowances are identified and addressed.

“It is important to seek advice from a specialist capital allowance professional that can identify and pool such specialist assets, even if you are using an accountant, tax advisor or legal representative. Not only could a purchaser or seller miss out on significant tax allowances, but their advisors could fall foul of the new rules and end up with negligent claims against themselves”

For initial informal advice on Capital Allowances Louise Barth can be contacted on 020 7636 7347 or via email at

This was posted in Bdaily's Members' News section by Altus Edwin Hill .

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