Why Claims Are Often Overlooked
Lack of Expertise
Experience has shown us that unless a business has access to the appropriate level of knowledge and expertise, it is rare for all available Tax Allowances to be fully identified. The vast majority of UK businesses are not claiming ALL the Tax Allowances to which they are FULLY entitled.
In short, the majority of commercial property purchases and subsequent developments, i.e. refurbishments, conversions and extensions are carried out without identifying all eligible items of plant & machinery and as a result both current and potential future claims for Capital Allowances have been missed. The ultimate consequence of this is that most businesses are paying more tax that they should and the Exchequer is receiving more tax than was intended.
 Failure to Identify – Plant & Machinery Allowances
The most common mistake we see is the failure by a business to identify much of the qualifying Plant & Machinery within a building.
Prominent Plant & Machinery assets that make up the integral fabrication of a commercial building including heating and cooling systems, emergency lighting, security systems and sanitary ware etc are examples. Typically these costs are not segregated from the building cost and are coded to freehold additions with no allowances claimed. In summary these items come under immovable installations within the plant and machinery section for Capital Allowances.
Complex Tax Legislation
Tax legislation in the area of Capital Allowances is indeed complex and changes frequently.
We have seen many re-writes of the law, if not in the underlying principles set out in the 2001 Capital Allowances Act then the percentage rates and levels of the reliefs available.
It is commonplace for modern day building practices to provide documentation that lacks detail. This makes it difficult to formulate a comprehensive, robust claim to the reliefs which the business is entitled.
Professional knowledge and experience is therefore key to ensuring that the vital information and documentation is obtained and correctly interpreted. This ensures that clients receive definitive feedback on qualifying assets in the final Report.
Timing of Current & Retrospective Claims
As noted above the complexity and ever changing nature of tax legislation in this particular area together with the interpretation of HMRC’s guidance means that, for many businesses, substantial amounts of allowances go unclaimed over numerous years. However this does not mean that such allowances are lost forever!
A current claim is easily made on the tax computation which accompanies the accounts and Tax Return for both individual and company taxpayers.
Where a claim has been missed in an earlier year, although it is not possible to go back and re-open tax computations from many years ago, the costs may be brought into account as qualifying expenditure in a later year providing that the assets are still in use in the business.
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