Talking Tax: April 2022
Author: Matt Jeffery, Managing Director
March proved to be another busy month for the capital allowances team. In total, we assisted 36 different clients to identify claims for capital allowances, unlocking over £3.1m in unclaimed tax relief. Below is a summary of three interesting cases we worked on:
Hotel in Edinburgh
Zeal helped the owner of a hotel unlock significant tax savings they were unaware they could claim. The mid-terraced property, situated close to Edinburgh City Centre, was purchased in 2007 for £730,000. After carrying out our due diligence, we were able to conclude that the property qualified for a capital allowances claim on the fixtures acquired with the building in 2007. Some of the original fixtures had been replaced, but this did not have a big impact on the claim.
In total, we identified a total of £174,447 of the £730,000 purchase price as qualifying for capital allowances. As the owner is a higher rate taxpayer, the total tax savings amount to almost £70,000. Although the tax savings are received over several years, the client did benefit from a cash windfall of £18,840. Another very happy client.
Construction & Refurbishment of Holiday Accommodation
Through our relationship with the Association of Scotland’s Self Caterers (ASSC), Zeal were contacted by one of their members who had watched one of our co-hosted seminars. The client owned 6 holiday let units in Inverness, which they had either built from scratch or converted to holiday accommodation. Over a period of time, the client had spent over £500k on construction and improvement costs.
No tax relief had ever been claimed by the owners against their holiday let profits. They did their own accounts and had read that as it was capital expenditure, it was only tax deductible when they sell the property. This is not correct as any capital expenditure that qualifies for capital allowances, can still be deducted against CGT on sale (as long as the property is not sold at a loss).
Our team carried out site surveys, utilised building plans and cost summaries held by the client to prepare the capital allowances claims. Once completed and approved by the client, the claim reports and amended tax returns were submitted to HMRC by Zeal’s in-house tax team. The review resulted in £117,698 of expenditure qualifying for capital allowances. This equates to at least £23,500 of tax savings, of which £3,600 was received as a cash rebate.
Dog Boarding Kennels – Market Drayton
Zeal were referred a Dog Boarding Kennels, from one of our accountancy firm partners, to review the scope to claim capital allowances on the purchase of the site. We were able to quickly establish that the owners had an entitlement to claim as the property was formerly in residential use when it was purchased. The kennel blocks and other infrastructure was added after purchase.
Following a site survey by one of Zeal’s capital allowances surveyors, we were able to identify that £143,126 of the £737,360 purchase price qualified for capital allowances. By making the claim in an amended 2020/21 partnership tax return, a refund of overpaid tax totaling £6,758 was generated. Payments due in July 2022 of £2,342 each were also eliminated and the client will also receive a further £32,400 of tax savings in the future. They were thrilled with result and very grateful to their accountants for introducing Zeal to them.
At the start of April, Zeal were named as the winner of the High Growth Business of the Year in Wales at the FSB Celebrating Small Business Awards 2022. With a total of 50 businesses contending for 12 awards, the event brought together and celebrated the best of Welsh entrepreneurship from all over the country. The win was a victory for the whole team. Zeal will now be representing Wales in the UK Final, which takes place in Glasgow next month.
We are also proud to announce that Zeal has joined The National Society of Allied and Independent Funeral Directors (SAIF) as an Associate Member. SAIF was established in 1989 to support and represent independent funeral directors, promote best practice and provide members with support, resources and helplines on a variety of business matters. Through this new partnership, Zeal will help fellow members take advantage of the unclaimed tax relief within their Funeral Homes, which most Funeral Directors do not know they are entitled to.