The Finance Act 2012 has substantially changed how Capital Allowances are considered within CPSE 1 s32 enquiries, and placed much of the responsibility for accurate entires with the conveyancing Solicitor. Inaccurate entries can result in the loss of sizeable tax relief at the point of sale. As of April 2014 the issue of capital allowances relief must be raised by the acting solicitors on every commercial property transaction.
How does CPSE 1 s32 affect you?
Solicitors – apart from a duty of care consideration there are also potentially litigation issues if CPSE 1 s32 is not handled properly. It was made clear in a Law Society article last year that it is the responsibility of the acting solicitor (for both vendor and purchaser) to ensure this matter is dealt with correctly. If it is not, it is eminently possible that a disgruntled client who suffers consequential losses due to the two-year rule governing the s198 election may well seek compensation if they feel that they have materially lost out as a result of their acting solicitor not dealing with this matter correctly. At best it’s highly doubtful they would instruct the same solicitor again even if they don’t go down the litigation route. This is all the more frustrating as it can be handled quickly and efficiently if a capital allowances specialist is involved from the outset. We support hundreds of Solicitors across the UK to accurately prepare answers to CPSE 1 s32 for their clients.
Accountants – Many of our clients look to their Accountant to provide the answers to a CPSE 1 s32 enquiry. This is unsurprising given the questions refers to taxation, however in almost all cases without the support of Capital Allowance specialists, Accountants are unable to accurately prepare an answer for the CPSE or s198/199. If an Accountant is aware that their client is buying or selling a commercial property then that client will rightly expect that their accountant will advise them effectively on all financial matters relating to the sale. We are very proud to support hundreds of Accountants across the UK, Singapore and Australia to ensure they provide accurate responses to CPSE s32 and property depreciation queries.
The Seller – If a seller establishes the level of Capital Allowances available in the property it becomes a strong selling point and certainly one that can be leveraged in negotiation. It adds value to the property and ensures the seller controls how that added value is used within the sales process. We regularly support Vendors to protect their asset and ensure that Allowances are transferred correctly and for a fair value.
The Buyer – Where a seller has not undertaken a review of the Capital Allowances within the property a buyer must ensure that the wording of the purchase contract does not prevent them from making a claim after completion. Our teams will ensure that appropriate wording is included within the contract to avoid this costly mistake.