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What opportunities are there for claiming plant capital allowances?
If you buy a freehold or leasehold interest in a commercial building, plant capital allowances may be due to the extent that part of the purchase price can be ascribed to fixtures. This is in addition to any plant capital allowances which may be due on moveable items of furniture which are not classed as fixtures. A fixture is an asset that is installed in a building so that it becomes part of that building or land in law, for example, a central heating system.
Other examples of fixtures include:
• Hot and cold water systems
• Electrical systems
• Sanitary ware
• Air conditioning
Not all fixtures qualify for plant capital allowances. In April 2008 a list of ‘integral features’ was inserted into legislation which clarified which fixtures would qualify for capital allowances and, for some fixtures, extended the ability to claim capital allowances. For example, general lighting would not have qualified as plant prior to April 2008.
Where a building containing fixtures is purchased, the normal rules provide that a ‘just and reasonable apportionment should be made in order to determine the part of the purchase price of property
attributable to fixtures. This apportionment may result in a significant proportion of the purchase being tax-deductible through the capital allowances system. In the past, this may not have been considered until after the building had been purchased.
There are anti-avoidance provisions that may limit the allowances to a lower figure. The basic aim of these provisions is to ensure that allowances given to the historical and current owners of the property do not exceed the original cost of these fixtures when they were first installed in the building.
HMRC believed that the anti-avoidance provisions had not necessarily achieved their aims and therefore introduced new measures some of which came into effect in April 2012 and the remainder came into effect in April 2014.
The measures can result in a purchaser not being entitled to any capital allowances on fixtures if certain
conditions are not satisfied.
Capital allowance claim