Have you claimed capital allowances on your building? time is running out… 3


act now icon

FA2008 introduced a new classification of integral features of a building or structure, expenditure on the provision or replacement of which qualifies for WDAs at the 10% special rate. The new classification applies to qualifying expenditure incurred on or after 1 April 2008 (CT) or 6 April 2008 (IT).

http://www.hmrc.gov.uk/manuals/camanual/CA22300.htm

The rules on integral features apply where a person carrying on a qualifying activity incurs expenditure on the provision or replacement of an integral feature for the purposes of that qualifying activity. Each of the following is an integral feature of a building or structure –

  1. an electrical system (including a lighting system),
  2. a cold water system,
  3. a space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor or ceiling comprised in such a system,
  4. a lift, an escalator or a moving walkway,
  5. external solar shading

Only assets that are on the list are integral features for PMA purposes; if an asset is not one of those included in the list, the integral features rules are not in point.

However, Plant and Machinery includes….

other building fixtures, such as shop fittings, kitchen and bathroom fittings

Many businesses have never claimed capital allowances for these items.

Paragraph 13 of Schedule 10 FA2012 introduced transitional provisions for making claims.

The provisions mean that where the current owner incurs expenditure on acquiring fixtures from a past owner before 1 (or 6) April 2014 and the past owner has not claimed allowances or pooled their expenditure in respect of a qualifying fixture,  the current owner may claim PMA on the part of the price the paid which is attributable to that fixture….. CA26470

It is possible for the buyer to use apportionment of the sale price (usually done by an RICS Surveyor) to determine the value of the fixtures. But this risks clawback of balancing charges for the seller.

A alternative option is to claim a Section 198 election which can be entered into within 2 years of the date of the property sale. It must be signed by the buyer and the seller and must identify the items covered. The elected value can be between £1 and the price paid, but makesure you undertand the implications of the price choosen.

As a Section 198 requires agreement you may wish to take legal advice Bonallack & Bishop Solicitors can help Jane.Bishop@Bishopslaw.com.

The Section 198 needs to made in writing to HMRC.

The following can’t claim a Section 198:

  • Property Traders
  • Developers
  • Pension Funds
  • Charities

But if you can claim you need to claim now as there are only a few weeks left until April 2014.

steve@bicknells.net

3 comments

  1. Hi Steve – I am looking to buy a commercial building – does this mean if the old owner has not claimed I now can [ provided I assume the completion occurs prior to the 1st April and I prepay ? ]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s