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Easter has come and gone and April approaches. Usually that heralds spring and the inclination to look forward to the summer but this year it heralds potential problems for commercial property owners who bought property in April 2014.

Under the changes to the HMRC rules related to the Finance Act 2001, the initial transitionary period ended and the fixed value requirement became necessary for all properties sold/bought after April 2014. The amount of Embedded Capital Allowances within a property had to be fixed and the apportionment agreed through the s198 to ensure there was no doubling up on claims. There is a period of 2 years allowed from the date of the transaction for the s198 to be submitted – if not then HMRC will set the allowances at zero – in perpetuity. They will be lost to all both now and in the future. That is potentially an expensive experience as these valuable allowances will be lost forever and in effect could devalue the property. From this point every month that passes sees more commercial property owners drop off the 2 year buffer and into the realms of mandatory zero setting of allowances – for good.

This is all so unnecessary as a full review using specialist Embedded Capital Allowances experts such as us can identify, quantify and report on allowances due, and present them in a way that HMRC accept and act upon. Its important that the rules are applied that are relevant to the particular property and relate to the rules that were in place when the property was originally purchased. If an accountant acting for a client who owns commercial property does not advise and assist them in this matter then they may well lose out considerably both now and in the future. They should look at this immediately regardless of which of the following categories they fit into.

  • If they own commercial property and have no plans to sell it they should ensure they benefit from the significant allowances that can be identified
  • If they are looking to sell commercial property that they own then they need to ensure that the Fixed Value Requirement is identified and set within the agreement and stated in the s198 document. That way they can probably get retrospective benefits as well as potentially use the remaining available allowances as a negotiating tool. Either way they are in control
  • If they are looking to buy a commercial property they need to ensure that the fixed value requirement is identified and set in any contract and the s198, or they risk having HMRC set it at zero so they can never claim it and defectively the property loses value.

The Finance Act 2001 has been around quite a while but the 2 year deadline that is about to become a reality will now start to negatively affect commercial property owners regardless so it important they review those allowances now.

It costs them nothing to find out as we will do a full review on a totally contingent basis – if there are no allowances then there is no fee. It’s so easy to do and so beneficial in most cases. Speak to your clients about this, put us in touch with them – we believe both you and they will be glad you did.