A business advisory firm has helped commercial property owners across the UK save millions of pounds in tax.
Cooper Parry, with offices in Derby, Leicester and Nottingham, provided advice on making capital allowance claims for landlords and business owners across the UK, including a property in Leicestershire, leading to savings of £1.9 million over a 12 month period.
It comes amid imminent changes to the capital allowances rules which will have a “huge” impact on commercial property owners and on their ability to obtain previously unclaimed allowances on prior property expenditure.
Mark Pashley, tax partner and capital allowance specialist at Cooper Parry, said: “Many commercial property owners are unaware of exactly what they can claim by way of capital allowances resulting in higher than necessary tax liabilities.
“The legislation is often quite complex and there are always constant changes affecting capital allowances so it is important to have technical expertise close at hand. Saving £1.9 million shows just how vital it is to review your property thoroughly for what can be claimed.
“These allowances are the taxpayers entitlement – but first they have to be identified and then claimed.”
“Without such a review, commercial property owners could find themselves paying too much tax without realising it. “
One of those to have benefited from the advice of Cooper Parry is a bedroom furniture importer based in Castle Donington who purchased a new warehouse property in 2010 for £2.5 million and a similar property in 2005 for £1.4 million.
The review identified a number of items qualifying for tax allowances including lighting systems, fire and intruder alarms, dock levellers as well as items of soft furnishings. The overall claim led to a tax saving of £139,000 with an immediate repayment from HM Revenue & Customs (HMRC) of £30,000.
Another review for an investment company in South Manchester, which owned various commercial properties, led to a tax saving of £388,000.
Mr Pashley has also warned how commercial property owners across the UK were at risk of losing thousands of pounds under new proposed change on how to claim capital allowances unless they acted quickly.
The warning came after HM Revenue & Customs published a consultation paper regarding changes to the capital allowance rules relating to qualifying expenditure on fixtures. If approved, these changes could have an impact on the way that such allowances can be reclaimed and vastly reduce the scope of available allowances.
The main HMRC proposal which will directly affect commercial property owners is that any business seeking to claim capital allowances on qualifying expenditure would need to notify HMRC of any such claims within a much shorter period of time (one or two years) from the date of purchasing the property and incurring the cost.
The proposals will also, if approved, have an impact on the ability of the seller and the buyer to apportion part of the sale price of a building to fixtures in order to maximise their respective capital allowance positions.
This means that if a second hand building was acquired in 2005 then the owner could lose their entitlement to all the tax relief on items such as heating/air conditioning systems or electrical installations by April 2013.
“Commercial property owners who prepare now will be the ones who will benefit over the long term which means that a review of any capital expenditure position across the property portfolio should be done now by consulting with your tax team,” said Mr Pashley.
“As the consultation process closed a few months ago and we await the draft rules which will be effective from the March 2012 budget, the clear advice is to act now or lose out forever.”
