Potential £35m capital allowance tax steal

Jan 2013

FA2012 s.43 Sch 10 brought in new S187A & 187B to CAA2001. These changed the way that the transference of capital allowances are handled when selling/buying commercial property.

S187A mean that going forward if you don’t get your ducks in a row you risk inheriting capital allowance pools of Nil for all the expenditure incurred. So it’s certainly worth checking your ducks are aligned correctly!

Furthermore 187B means that even though the purchaser has suffered a S187A capital allowance car crash, the vendor will still have to bring in a disposal value in accordance with CAA 2001 s196 i.e. market value (in most cases).

So the purchaser has a starting point of Nil and the vendor suffers an £X reduction in their pool(s), one minute, what happened to the difference?

Well, a piece of legislation brought in to stop “double claiming” now results in a net win for the Treasury. Treasury figures expect the benefit to be £35m by2016/17, we would expect it to be significantly more.

Got clients buying or selling commercial property? Contact us today to make sure they don’t become part of the treasury’s wind fall.