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Winners – New Business of the Year

HMA Tax are very pleased to have won the coveted New Business award at the Black Country Chamber of Commerce Awards 2017. This award recognises the excellent service we provide to our clients and the exceptional growth we have achieved whilst helping businesses and individuals identify over £60m in allowances. We are extremely grateful for this award and are delighted to add this to our shelf.

The competition in this category was very strong and we are proud that our customer service record and remarkable 100% approval rate with HMRC was recognised by the judges.

Tom Meredith, Managing Director, commented:

“We have an excellent team here at HMA Tax and I am proud that together we are able to offer such an incredibly valuable service to owners of commercial property across the UK. To come out on top of what was a very competitive category is very flattering”.

HMA Tax help owners of Commercial Property identified previously unclaimed capital allowances and receive tax refunds.

The Process of Claiming Embedded Capital Allowances

Claiming Embedded Capital Allowances is simple, straightforward and stress-free. Our expert team work hard to ensure that you receive the tax relief you are entitled to in a way that requires very little input from our clients.

Many commercial property owners have the potential to claim Embedded Capital Allowances on their property, however some may be put off by the idea of the claiming process. Claiming is easy and straightforward, because our specialists do the difficult bit for you.

We only need an hour of your time to gather information and talk you through the process, then we do the rest. In order to start your claim, we’ll need to talk to your Accountant and get some information from the past few years and we’ll request a copy of the information land registry holds for the property. Again, this doesn’t take long and only relates to information that is needed for a sucessful claim. Once we have identified whether you have a claim, we’ll send out one of our friendly surveyors to look around your property and identify unclaimed items which qualify for tax relief. Based upon the findings from our surveyor, a specialist Tax Accountant will complete a detailed report for approval by HMRC in order to quantify the level of allowances your property will qualify for.

On average, it takes only 8 weeks from our initial meeting to you receiving your relief from HMRC. This relief often adds up to tens of thousands of pounds, a positive impact on any businesses’ cash flow. If you’re wondering whether this is all worthwhile, take our client David from Arctic Spas. When we first met David, he was sceptical about whether he’d have the time to make a Capital Allowance claim. We were able to identify over £127,000 of allowances in his commercial property!

If you have an hour to spare, get in touch to arrange a meeting with one of our specialists who can begin the straightforward process of identifying your unclaimed tax refunds.

Different types of Capital Allowances

Whilst we always state the importance of commercial property owners making a Capital Allowance claim on their property, owners must be aware of the different types of Capital Allowances in order to make a successful claim.

Writing-down Allowance

Expenditure that exceeds the annual amount claimed for the cost of a capital item may be eligible for a writing-down allowance. This type of allowance can be used if you’ve already claimed Annual Investment Allowance on items worth a total of more than the AIA amount and/or if the item doesn’t qualify for AIA, for example cars or items you owned before you used them in your business. Writing-down allowances are available when you deduct a percentage of the value of an item from your profits each year, and in most cases, the value is what you paid for the item. To claim this type of allowance, group the items you’ve bought into ‘pools’ based on the percentage rate they qualify for. When you know the rate for your items, work out how much you can claim and deduct it from your profits before tax on your tax return. The amount left in each pool becomes the starting balance for the next accounting period.

AIA Capital Allowance

From April 2008, businesses have been able to claim back a specific amount each year for the purchase of plant and machinery. Each year, claims can be made up to a specified amount, and if possible, you can claim 100% of the cost of plant and machinery if the year that you buy it was a first year allowance. This applies to equipment, machinery and to work vans, but not cars. The maximum amount that can be claimed varies from year to year, but is currently £200,000 from 1 January 2016 for a twelve month period. It is important to note that you can only use your full Annual Investment Allowance in the year that you buy the asset.

Small Pools Allowance

If one of your pools gets down to less than £1,000 (or less before you work out the writing-down allowance) in value after you have used your Annual Investment Allowances for the year, you can claim all of the remaining amount at once as a Small Pools Allowance. You can claim this instead of claiming a writing-down allowance.

First Year Allowance (FYA)

This is fairly similar to the Annual Investment Allowance, as you can claim 100% of the cost of specific assets in the tax year that you buy them. These include:

  • New zero-emission goods vehicles
  • New plant and machinery for use in designated areas within certain enterprise zones
  • Certain new energy-saving and water efficient equipment
  • New cars with carbon dioxide emissions of 75gms per km or less
  • Specific new vehicle gas refuelling equipment

100% first year allowances enable companies to deduct the entire cost of the purchase from the trading profit in the accounting period during which the purchase was made. However, there are restrictions on claiming FYA, since they cannot be claimed where an asset has been received as a gift, and/or an asset has been used privately prior to being used by the business, or where the asset has been used as a sole prop before incorporating and moving into the new business.

Business Premises Renovation Allowance

This type of allowance was introduced to give an incentive to bring unused properties back into use. BPRA gives an initial allowance of 100% for expenditure on converting or renovating unused business premises in a disadvantaged area. For example, £100,000 spent on refurbishing quality unused premises generates a tax saving of £40,000 in the year of expenditure for a 40% taxpayer. The scheme has been extended to April 2017 and the basic principle is that the property must be within the disadvantaged area, must have been unused for 12 months prior to work starting and must be commercial premises.

Special Rate expenditure

Specific equipment can qualify for this special rate, currently at 8% per year. These types of items would include:

  • Parts of a building considered integral, known as ‘integral features’
  • Items with a long life
  • Thermal insulation of buildings
  • Cars with CO2 emissions of more than 130f/km

For more information on the different types of Capital Allowances and to see what type you can claim on, get in touch with one of our specialists.

Professional Dentistry London

As Capital Allowance specialists, we look forward to meeting as many commercial property owners as possible, which is why we always take the opportunity to attend exhibitions. So when the chance to attend the Professional Dentistry exhibition arose again, we knew this would be the perfect chance to introduce our services to the many dental professionals who could benefit from a Capital Allowance claim.

After the success of the Professional Dentistry exhibition in Glasgow last year, we knew that the same exhibition in London will prove to be just as interesting, allowing us to meet dental professionals within the city whose practice could be holding thousands of pounds in allowances. One of the key benefits of these exhibitions is the ability to thoroughly explain our services in person, and show dental practice owners how and why they can claim these allowances. In the past, many dental surgery owners have been surprised at just how much tax relief they are entitled to, which is why it is so important for professionals to identify a potential claim, especially since there is no risk to finding out since we only charge a fee once allowances have been successfully identified and accepted by HMRC.

Our specialist (and friendly) team will be there on Friday and Saturday at stand 472 to answer any Capital Allowance related questions, whether you’re in the process of making a claim, are considering making a claim or are simply interested in our services, please do not hesitate to approach us and we will endeavour to answer any questions you may have. We look forward to seeing you there!

s198 Election

s198 Election – Capital Allowances

On a daily basis, we face various types of capital allowance related questions. A common one being, do I need to submit an election? Whilst there is much to take into consideration when claiming capital allowances, the subject of s198 elections are a crucial component to consider, especially when selling the property, and a failure to do so could result in the loss of allowances for current and future owners of the commercial property.

In accordance with the Capital Allowances Act 2001 (CAA 2001), the current mechanism for agreement by the seller and buyer as to the apportionment of capital allowances for fixtures in a property interest being sold is an s109 or s199 election. The changes to the fixtures rules which were included in the 2012 Finance Bill mean elections will become mandatory for all property transactions going forward.

Taxpayers have two years from the date of the transaction to submit an s198 or s199 election. If an election is required and not submitted during the two-year window, the effects of the election will not be binding and HMRC could make an alternative assessment for tax purposes. This assessment will mean the tax liability will be higher as the allowances may not be taken into account. Ultimately, the allowances will be lost in perpetuity on that property.

The s198 or s199 election notice must be submitted to HMRC and completed correctly to be valid, or the whole exercise may become void.

In the past, CAA 2001 s198 (freehold) and CAA 2001 s199 (leasehold) elections have often been completed poorly with inaccurate information or with historical detail not being taken into account and sent to HMRC. However, under the new legislation, there are legal and commercial consequences if this continues, and can have a negative impact upon the property owner. HMRC can now reject the submission of an incorrect election or declare it invalid, often resulting in the loss of allowances, which is why many commercial property owners have missed out on these important tax refunds.

Given the negotiated nature of these agreements, it is highly likely that the seller and the buyer will want to reach a settlement on the value and contents of the s198 or s199 election as part of the sale process prior to completion for certainty, and at a time when the purchaser at least has more leverage. If the apportionment values cannot be agreed, then either party can, within the two-year period of the transaction, unilaterally refer the case to an independent tax tribunal for determination.

It is important to note that it is only possible for a valid s198 election to be made if the seller has actually claimed capital allowances during their ownership.

So from April 2014, sellers will need to pool their fixtures expenditure, unless they are prepared to risk the price of their property being chipped down in recognition that no allowances will be available. To avoid unnecessary costs, confusion, delays or jeopardising the whole transaction, sellers can collate all the relevant capital allowances information, with which we can use to liaise with their solicitor to ensure the position is included within the draft heads of terms for the sale of their property.

If you’d like more information on this matter and feel that you require specialist advice, please get in touch with a member of our team who will be happy to help you with any queries.

For more information read our post on the importance of CPSE 32

Why Property Owners Miss Out on Allowances

Currently, there are millions of commercial property owners that are sitting on a wealth of unclaimed tax relief due to a variety of (mostly) avoidable reasons. As a commercial property owner, it is important to identify how to claim the Capital Allowances available to you and to employ specialists, such as us, to make a claim for you. Here are the top five reasons why many property owners have missed out on a claim.

Expecting accountants to make a claim

Many commercial property owners are under the impression that their accountant will have made a capital allowance claim for them, however this is unlikely because this is such a specialised area of tax that requires the additional input of both qualified surveyors and tax advisors with a different skill set and detailed knowledge of the up-to-date legislation. Expecting an accountant to specialise in an area they are not experienced in would be similar to expecting a dentist to be able to perform as an orthodontist.

The Finance Bill 2012

Since the introduction of the Finance Bill 2012, many commercial property must ensure that Capital Allowances are identified at the point of sale in order to claim the maximum tax relief they are entitled to. Since the transitional period ended in April 2014, there is a new obligation on the seller and buyer of commercial property to agree the Capital Allowances position in order to make a successful claim. Once our specialist team advise property owners and their solicitors of this, they are able to claim thousands of pounds of tax relief that is theirs by right.

Inaccurate elections being submitted

In the past, CAA 2001 s198 (freehold) and CAA 2001 s199 (leasehold) elections have often been completed with inaccurate information or with historical detail not being taken into account and sent to HMRC. However, we can work with commercial property owners and their solicitors to avoid any legal and commercial consequences as a result of inaccurate elections. We can advise property owners on how to submit accurate elections, taking into account all the relevant details, therefore allowing the owner to receive the maximum tax relief available.

Not believing that this is a genuine tax scheme

One of the most common things we hear commercial property owners state is ‘this is too good to be true’, or, ‘this sounds like a tax loophole’. It is important to be aware that HMRC introduced Capital Allowances as an incentive to encourage investment into commercial property and to kick start the economy. Tens of thousands of Capital Allowance claims are processed by HMRC every year, and we have a 100% approval rating with having claims accepted by HMRC.

Not having enough time to make a claim

Claiming for Embedded Capital Allowances requires minimum input from the commercial property owner, and maximum output from us, the Capital Allowance specialists. We deal with all the hard work, whilst the property owner simply provides the basic details of the property. The process usually takes around 6-10 weeks, during which we send out one of our specialist surveyors and a specialist tax advisor who will create a report to submit to HMRC.

Great Results for Office Owner

We recently had a client who owned an office suite in a prime location, which gave us the initial impression that this could be a substantial claim. Typically, within offices around 35% of the original purchase price of the property can be identified as allowable, and for our client whose property was worth £4,800,000, we had an idea of the level of allowances that would be found.

Upon surveying the property, we managed to identify items such as air conditioning, kitchen and toilet fittings heating systems, security systems, radiators and more that could all qualify for tax refunds. These items are essential within every office block, and it is important for the owner to realise when they have been overpaying tax on items such as these.

As expected, the allowances identified came to a high figure of £672,560, resulting in a tax refund of £134,530 directly to the office owner. Our client was surprised at just how high the figure was, and confirmed the importance of undergoing a capital allowance claim for the benefit of the individual and the company.

One of the initial factors that compelled our client to employ us to investigate potential allowances was the fact that we only charge a fee once we have identified allowances, which meant that there were no upfront fees and initial costs were covered by us. What’s more, we have a 100% success rate with having claims accepted by HMRC and a positive track record of identifying allowances for our clients. This was a risk free exercise that produced fantastic results for our client, and we can continue to find these kind of results for other clients with similar properties.

Substantial Allowances Found Within Care Home

As capital allowance specialists, whenever we have a client who owns a care home, from the onset we know that they are likely to be entitled to a large amount of capital allowances, as long as they haven’t claimed before. Due to the nature of care homes, there are a whole host of items within the property that qualify for tax refunds, which adds up to a pretty hefty claim.

Once we found out that the property was worth £2,330,440, we got an idea of the scale of this claim and the type of allowances that would be found. The process itself was easy, stress free and required minimum input from the client, as with all our other clients. The client was unaware of just how much they could claim on their property and once we explained the importance of claiming, they soon saw these allowances as their right, not privilege, especially since they had been overpaying a great deal of tax, which we were about to refund to them.

Within the property, we identified allowances on items including boilers, sanitary ware, heating systems, kitchen items, security systems, door closers, suspended ceilings, lighting systems, air conditioning and more. As with all our other claims, these items are essential to the running of a care home and without which the property would not be able to function, so it was important for the owner to claim the tax refunds they deserved on these items.

Within the home, we identified £738,600 worth of allowances, which resulted in a cash refund of £89,820 to the property owner, upon which they soon realised that this was certainly a worthwhile exercise.

Whenever we survey properties such as this one with such a high amount of allowable items, we almost can’t believe that the client hasn’t made a claim before and that they have been sitting on a wealth of tax relief they never knew they were entitled to. The common reason for this is because the client believes that their accountant will have already dealt with any capital allowance claims, which is often not the case because accountants don’t have the specialist knowledge of this area of tax or a team in place qualified to deal with these claims. This is why it is important to employ specialist capital allowance experts, such as ourselves, to identify any potential claims.

Great Success for Dentist Surgery Owner

Over the years, standards in dental practices have significantly improved, which can often result in the potential for high Embedded Capital Allowance claims for surgery owners. With the use of highly specialised equipment, owners have the potential to claim allowances on these items, which we found recently with a client who was able to claim a significant amount of allowances on items within the surgery they practiced from.

Much to our clients’ surprise, we were able to identify a wealth of allowances within the surgery that was originally worth £104,880. Items such as air conditioning, specialist lighting, sinks and plumbing in each room, specialist equipment, security systems, emergency lighting, wiring and more all qualified for capital allowances. These items are considered part of the surgery and can be costly to run, which is why it was important for the owner to claim the tax refunds they were entitled to and see these refunds as their right, not a privilege.

After an initial free consultation with our business development experts, we arranged for a surveyor to assess the property upon which they identified these items that qualified for tax relief. Much to the delight of our client, we identified £34.5k of allowances which resulted in a cash refund of £6,976 to the surgery owner.

These refunds provided fantastic benefits for the property owner, and have the potential to increase the value of the property, so if the owner comes to selling the property, they can look back upon this exercise and see it as a very worthwhile activity that provided present and future benefits, and at no risk to the individual.

Cash Refunds for Showroom Owner

We recently completed a claim for a client who owned a showroom/warehouse. This client wasn’t really expecting to find many allowances on their property, but decided to give it a go anyway. Since our initial consultations are free and we don’t charge anything unless allowances are identified, this client had nothing to lose by ‘giving this a go’.

To the surprise of the property owner, we were able to identify allowances on items such as air conditioning, heating systems, lighting systems, door closers, cold water systems and more. These items were holding a wealth of tax relief.

Once we had surveyed the property, we knew this was a worthwhile task for the client, and they soon realised the importance of claiming these allowances, since were able to identify £127,770 of allowances on their property worth £470,050, resulting in a cash refund of £23,500 direct to the property owner!

This case shows the importance of arranging a meeting with us, no matter whether you think a claim might be small or even non-existent, it still has the potential to be a very worthwhile task, with no risk to the property owner. We only charge a fee once we identify allowances, so investigating a potential claim will cost the client nothing, and will confirm what they are entitled to.

The tax refunds provide a wealth of benefits, because as well as the cash itself, the value of the property could increase as a result of making a claim, which adds future benefits on top of the present benefits to making a claim. If you own this type of property, then why not get in touch with a member of our team to see if you could benefit from our specialist capital allowance services? You have nothing to lose!