Catax’s analysis of HMRC property figures estimates that as much as £2.2bn of tax relief may have gone unclaimed since the implementation of the Finance Act 2012.
The Finance Act 2012 dictates that should a capital allowances claim not be made prior to the acquisition or disposal of a commercial property, the ability to claim could be lost forever. In practice, a purchaser is unable to claim any capital allowances on fixtures within a property unless the vendor has first brought the costs, and then a disposal value into their tax computations. Failure to do so will mean that the benefit could be lost for both the vendor and the purchaser as well as, all other future sales. We calculate that the total loss of tax relief for this 12-month period is likely to be in the region of £2.2bn. This figure is based on the latest HMRC UK Property Transaction Statistics and our experience in providing capital allowances valuations for all types of commercial property.
Catax Managing Director Mark Tighe, said any commercial property owner that had not claimed the allowances would “have a bitter taste in their mouth” when thinking about the lost tax relief. “Property owners are still missing out on the potential for substantial tax rebates – rebates that could be lost in perpetuity if they’re unclaimed at the point of sale.”
As commercial property advisors, you must ensure your clients aren’t the next group of commercial property owners to be added to this ever growing number. It is imperative you raise the issue of capital allowances, not just because your clients are entitled to it but you are also ensuring you are following the correct legal procedures to fulfil your responsibility.
*Calculations based on Catax analysis of HMRC Property Statistics