Talking Tax: June 2022
Author: Matt Jeffery, Managing Director
May was a busy month for the capital allowances team. Although we had a key member of the team away for most of the month sitting their Chartered Tax Advisor exams, we still managed to assist 31 different clients to identify claims for capital allowances, unlocking over £3.8m in unclaimed tax relief. We have also commenced several large projects for care and education companies, a public company that has invested in constructing commercial property and a multi-site self-storage business.
Below is a summary of two interesting cases we worked on:
Capital Allowances Review – Wedding Venues
Zeal carried out a capital allowances review for a company that owned wedding venues, hotels, restaurants and holiday lets in South Wales. The company, which are owner operators, had built up a large portfolio of property assets over the past 25 years. Zeal reviewed the capital expenditure incurred to identify missed claims for capital allowances on the purchase and improvements to the buildings. This included an analysis of the company’s fixed asset register, corporation tax computations and meetings on site with the owners. This enabled Zeal to identify which properties and expenditure would have entitlement to claim capital allowances and any restrictions to apply.
Following site surveys of the relevant properties, Zeal’s technical team prepared detailed capital allowances reports to identify the qualifying expenditure and provide support for the claims when they are submitted to HMRC. In total, we identified £1.45m of historical capex that qualified for capital allowances. This will equate to total corporation tax savings up to £362k. An immediate cash refund of £49k was received and tax due later this year reduced by £36k.
The qualifying expenditure is claimable in the first open corporation tax return. In this case, that was the 18 month period ended 31 March 2021. Zeal’s team processed the claims in amended corporation tax returns and dealt with the submission to HMRC. All final claim documentation was issued to the client’s accountants to enable them to claim the tax relief each year going forward. Both the client and their accountant were delighted with our service and the results achieved.
Purchase of Office Building
We were contacted by an accountant that Zeal works with to provide high value tax services to their clients. One of their clients had purchased an office building during their last accounting period and they asked Zeal whether any capital allowances would be available. Zeal carried out a free entitlement review to establish if there was scope to claim any capital allowances. Following a check of the purchase contract and Land Registry records, it was established that the Vendors were a pension fund, who could not claim any capital allowances. The purchaser, a plumbing wholesale business, would have entitlement to claim capital allowances on the proportion of the purchase price that related to embedded fixtures they acquired with the building.
Zeal were engaged by the client to prepare the capital allowances claim. The modern office building was built to a high specification and included high value fixtures. For example, a passenger lift, sprinkler system, automatic lighting systems, floor boxes for data and telecoms, fire alarm, security systems, air conditioning, kitchens, bathrooms etc. As a result, Zeal were able to identify £214,421 of the £650,000 purchase price as qualifying for capital allowances. This will result in corporation tax due by 30 September 2022 being reduced by £40,740. A great result for the client!
Commercial Property Agents
The capital allowances team recently delivered a CPD training session on capital allowances for commercial property, to Cooke & Arkwright, Wales’s leading independent commercial property advisor. It was great for the team to get back to doing these sessions in person, a feeling that was echoed by C&A’s team. Zeal provided an overview of capital allowances tax relief, the rules for claiming capital allowances on commercial property, case studies and opportunities to be aware of for their clients. The thirty-minute lunchtime session was warmly received by C&A’s team.
If you are commercial property agent, Zeal offer a free 30 minute CBD training session. We also have excellent introducer opportunities, enabling commercial agents to add value to their existing client services and earn additional fee income. For more information download our Guide for Commercial Property Agents here.
Zeal proudly sponsored and attended the prestegious Finance Awards Wales 2022 last Friday, which celebrated and recognised the talented finance professionals working in Wales. As the sponsor of the Chief Financial Officer / Financial Director of the Year category, Zeal Director, Rhodri Taylor, presented the award alongside Wynne Evans. Congratulations to the winner Wyn Innes from Ogi! A big well done to all other shortlisted parties and award winners too.
Our team also traveled around the UK to various exhibitions and events throughout June from The Welsh Business Show (Carmarthenshire) to the Association of Scotland’s Self-Caterers (ASSC) Regional Get Together at Inveraray Castle (Scotland), the Annual World of Park & Leisure Homes Show (Warwickshire) and the Childcare & Education Expo North (Bolton). As face-to-face events start back, enlightening business owners from all industries about unclaimed tax savings in their properties remains a top priority for Zeal.
With July 31 fast approaching, you can help your clients reduce or even eliminate their July tax bill and generate thousands in future tax savings by making an ’embedded fixtures’ claim on their business property. Introduce them to Zeal and we’ll do the rest. There is no risk to you or your client as we charge no upfront costs and work on a success-fee basis. We also offer a free review and property survey to identify all qualifying items. For each client you introduce, we’ll also give you a generous referral fee which you can choose to keep or pass on as a discount to your clients. As there are limited property survey slots remaining for July, contact Zeal today to ensure your clients secure their savings before the payment deadline.