FA2012 s.43 Sch 10 brought in several requirements that need to be satisfied when buying or selling commercial real estate and transferring fixtures [see previous blogs]. It was decided that bringing in a transitional period for the new legislation would make everything easier for the tax payer and their advisors. This has of course led to much confusion as to whether or not the legislation is in effect or if like the world cup it can simply be put on a shelf and left to gather dust until 2014!
Noncompliance with the new legislation will result in some potentially disastrous out comes for both buyers and sellers. This includes a loss of all potential reliefs for the purchasers along with potentially devaluing their new property overnight. So the shelf is definitely out!
The rule of thumb is that until April 2014, when the pooling requirement takes effect, the new legislation only has effect where allowances have been claimed on the fixtures by the vendor. If this is the case then in the vast majority of instances the fixed value requirement will have to be met either by a S198/S199 or a decision from the tribunal. This of course requires pre-emptive enquiries and we would always urge both parties to make a discussion on capital allowances a part of the transaction negotiations.
We often assist our partners and their clients in protecting their capital allowances and negotiating from an informed position when buying or selling real-estate. With the new legislation upping the stakes some may argue that not providing this service is a breach of an advisors duty of care. Conducting a capital allowance review and canvassing your clients about their property related plans are a good starting point in helping to avoid the many potential pitfalls these changes have thrown up. If you would like any assistance with this or to discuss these issues further please don’t hesitate to get in contact.