Commercial property owners are being urged to seek advice on vital tax relief that could save their business thousands before it is too late.
Reforms outlined in the Finance Bill 2012 take effect in April and will dramatically change the qualifying criteria for businesses to make claim to capital allowances on properties that they own or have significantly improved.
Most businesses and accountants claim capital allowances for computers, vehicles and tools of the trade, however, many do not recognise that these same allowances also apply to central heating, lighting and even door furniture within a commercial property.
Historically, not claiming allowances for these items at the point of buying a commercial property has not been an issue as businesses have been able to make retrospective claims. However from April prospective purchasers and their advisers must understand when and how to make a claim or they risk facing considerable losses.
South Wales chartered certified accountants Morgan Hemp & Company, are urging businesses to act immediately to investigate if their property qualifies, or risk losing out on their stake to claim capital allowances when the eligibility criteria changes.
Richard Morgan, Managing Director of Morgan, Hemp & Company said: “Historically businesses have been able to backdate their claim on their property so long as all eligibility to claim capital allowance relief was met. However as of April 2014 the capital allowance system will undergo significant changes that will need to be addressed at the point of purchasing a property.”
“The Finance Bill 2012 is set to impact both participants in property transactions in different ways and by April 2014 all parties involved will have to play a more integral and up front part in the process.”
“As of April 2014, claims on the position and eligibility for capital allowances relief must be resolved with the property vendor prior to purchase. For properties that are purchased after April 2014, if the treatment of capital allowances is not documented correctly, owners risk losing out on their right to claim.”
“Claiming capital allowances can be viewed as a difficult process so we would strongly suggest that expert advice is received to ensure that it is as straight forward for your business as possible. We work alongside specialist capital allowance consultants, Six Forward, on behalf of our clients and as a result have recently secured tax relief sums in excess of £120,000 for one business operating with in the health sector and over £50,000 for a solicitors practice.”
“We would urge anyone who is about to buy or sell a commercial property to take expert advice immediately as preparation to secure capital allowances must be made soon.”
At present, commercial property owners have no time limit imposed on their claim, meaning that even properties that have been in the business for many years and have not been claimed on can be looked in to.
Currently companies can claim capital allowances in respect of items that make up the intrinsic fabric of their property such as plant, machinery and integral features such as door handles, lighting, security systems and heating systems without any qualifying timeframe.
It is estimated that there is in excess of 1.4m commercial property units in England and Wales, many of which due to their occupancy by SME businesses, may not have investigated the relief that could be obtained by capital allowances.