Replies to CPSE

The changes introduced in the Finance Act 2012 have necessitated a revision of the capital allowances section contained within the CPSE.1 enquiries.

The questions which centre on the mandatory pooling and fixed value requirements are explored below.

32.3 If you have not pooled any expenditure on plant or machinery fixtures:

(a) will you do so if the Buyer asks you to?
You will need to consider your client’s intention with regards to what are, at present, unclaimed allowances.
Is it desirable for the current owner to retain the allowances? Will there be a tax liability to offset them against?

Conversely, is a consideration available from the purchaser in return for the benefit of allowances being passed to them? This may be something that needs to be discussed and explored further.

(b) if so, by when?
If the decision is made to pool the allowances, it must be completed whilst the vendor’s tax return for the year of disposal remains open for amendment.

(c) if not, why not?
If the vendor does not wish to pool the allowances, a reason should be provided. Unless there is an explicit reason preventing allowances from being identified, the vendor will typically be willing to cooperate.

32.4 If you bought the Property and cannot pool any expenditure on plant and machinery fixtures:

(a) please provide the name and contact details of everyone who has owned the Property since April 2014;
This is important because it will establish whether or not there has been a ‘past owner’ i.e. someone who was eligible to claim allowances and owned the property post April 2014. The mandatory pooling requirement will only apply in situations where there has been a ‘past owner’.

(b) please provide evidence that the most recent previous owner who was entitled to claim allowances pooled any expenditure on plant and machinery fixtures? Please answer the supplementary questions in enquiry 32.9 in respect of that previous owner’s expenditure.

Following on from (a) this query aims to confirm that the past owner has pooled any available allowances as required. 32.9 requests further detail of this expenditure.

32.10 Please provide the name and contact details of your capital allowances adviser. Please confirm that we may make contact with him/her in order to obtain information about the matters dealt with in this enquiry 32.

In line with the increased focus on capital allowances, it is now expected that the vendor will provide the contact details of a capital allowances adviser acting on their behalf. This will ensure that all parties are aware of the property’s current capital allowances position, and maximises the chance of a successful claim being identified.