capital allowances - the opportunity
TRANSCRIPT
We are Specialists in Reclaimingyour Capital Allowances
Who are Portal Tax Claims?
• Part of the Portal Group whose main directors have been working together continuously since 1990.
• The Portal Group HQ is located in Rochester, Kent, operating from a 7,000 sq. ft. freehold, purpose-built office with over 100 PAYE employees.
What Capital Allowances are not!
• Not Capital Gains Tax
• Not the same as your ‘Capital Account’
• Are not effected by the ‘Charging balance’ when it’s time to sell [CA’s are not added back into the CGT calculation]
What exactly is a Capital Allowance claim?
Capital Allowances are retrospective claimsbased on the original purchase price. It is not acontentious tax avoidance scheme or loopholebut is based on established UK statutory lawdating back to 1878.
HMRC states that:
• It is your statutory right to claim- since 1878
• Every building has claimable allowances inherent withinthe purchase price
• Highly valuable form of non-conflicting relief, anestimated 96% of property owners are paying too muchtax by not claiming.
You are not a “guinea pig” as
thousands of cases have already
been submitted and paid out.
An estimated 96% of all UK commercial property
and furnished holiday lets have NOT claimed...
... There could be a cheque waiting for you!
Capital Allowances are overlooked?
BUT WHY?
This doesn’t have to be you...
THERE IS COMPLEXLEGISLATION INVOLVED
• All tax advisors come across Capital Allowances, however:
– The legislation is counter-intuitive……………. AND
…………..Opportunities are missed far too often
HMRC makes claiming difficult because
• Shrouded in complex legislation
• Specialist tax area not covered by accountants
• Requires many specific skill sets to identify &
claim
• Once again, only 4% of all UK commercial buildings have had their entitlement claimed
WHAT SPECIFICALLY CAN YOU CLAIM ON?
UK commercial Property
Furnished Holiday Lettings
... you need to know about First and Second Fix
V
• FIRST and SECOND FIX are what precedes the completed property
• You claim on ‘Plant & Machinery’ from the SECOND FIX when you
claim
There are significant differences in FIRST & SECOND FIX
What is FIRST FIX?
You cannot claim on these...
What is FIRST FIX?
FIRST FIX comprises all the work required to take a building from thefoundations to the application of plaster on the internal walls.
• FIRST FIX includes:• Walls
• Floors
• Ceilings
• Inserting cables for electrical
supply
• Inserting pipes for water supply
What is SECOND FIX?
... but you CAN claim on these.
What is SECOND FIX?SECOND FIX comprises all the work after plastering to the finished
building
• SECOND FIX includes:• Connecting electrical fixtures to
cables
• Connecting sinks and baths to
pipes
• Fitting doors into doorframes
• Lighting
• Installing cookers and washers
• Flooring
• Crown moulding
Where are the allowances hidden?
We find CA’s in two places:
• Inherent: in the very fabric of the building
• Current: in your Accounts – we scrutinise the ‘Capital’ and ‘Revenue’ accounts
What can YOU claim on?
THE POSSIBILITIES ARE ENDLESS!
Examples: Commercial Property
• Offices, Hotels, Medical Centres, Care homes, Public Houses, Retailoutlets, Shopping Centres, Cafés, Restaurants, Service stations,Estate agents, Banks, Dentists, Factories, Blocks of flats etc.
• Basically, Commercial property is real estate which is intended for useby ‘for profit businesses’.
Purchase Price £3,200,000
Identified CA £ 800,000
Client Benefit £ 224,000
Residential Flats, held within a company
Purchase Price £325,000
Identified CA £187,000
Client Benefit £ 74,800
Freehold Pub
Purchase Price £325,000
Identified CA £107,800
Client Benefit £ 43,120
High Street Shop
Purchase Price £3,178,764
Identified CA £1,226,429
Client Benefit £ 343,400
Nursing Home
Purchase Price £1,200,000
Identified CA £ 470,000
Client Benefit £ 131,600
Office Building
Purchase Price £11,487,230
Identified CA £ 4,190,034
Client Benefit £ 1,173,209
Hotel
FHL
• Holiday accommodation (furnished) either in the UK, or inthe EEA. Can be a villa, flat, singular or multiple bedrooms.Any type of property.
• It has to be available to rent for a minimum of 140 daysper year.
• It has to be actually rented out, for a minimum of 70 daysper year.
• Losses can be set against any income, as well as CAs.
*** HMRC Changes in April 2011
Purchase Price £365,000
Identified CA £121,666
Client Benefit £ 48,666
Holiday Apartment
Purchase Price £2,750,000
Identified CA £ 825,000
Client Benefit £ 330,000
Holiday Villa
ARE YOU ELIGIBLE FOR A RECLAIM?
• To be eligible, the following criteria MUST be met:
– UK commercial taxpayer
– Own UK commercial property or a furnished holiday let
(FHL)
– Purchase price: £200k+ [300k+ EEA area]
– Cannot be owned by a pension, charity, developer or
Government
– You MUST have paid UK tax the past two years or aregoing to pay tax in the future
OUR CURRENT OFFERINGS
• UK Commercial Property > £200K
• Furnished Holiday Lets (FHL) within the UK > £200K
• Furnished Holiday Lets (FHL) within the EEA > £300K (collectively)
• Multi-Let & HMO Portfolios > £1,000,000
The taxman will take your money.
Don’t let this be you!
IF YOU MEET THIS CRITERIA...THE TAX MAN PROBABLY OWES YOU
THOUSANDS OF £££££££££££
YOU CANNOT LOSEIf we fail to find you at least £25,000 of unclaimed CapitalAllowances, you will owe us nothing
• Capital Allowances areintended to encourage you toinvest but because they aremisunderstood, they are not being claimed
• Claims can be retrospective
• There is no time limit on howfar back you can go
• Doing this does not affect yourCapital Gains Tax position if yousell your property
The processOnly one claim per building in it’s lifetime
• We have to contact ALL owners back to 1996
• If we validate that no previous claim has been made– We arrange a FREE survey by an Independent RICS
surveyor
– Accountants prepare the report using HMRC matrices
The process…..• We submit the report to your Accountant
– Your Accountant, promptly, submits the report on-line to HMRC
– If requesting a Tax refund – HMRC pay in 21 days
TIMESCALE: 8 Weeks from instructions
We are experts
We use an Independent Surveyor who works with complex
tables and internal HMRC- approved matrices to compile a
detailed, accurate, compliant, non-confrontational and
robust report in a format approved by HMRC.
The result is that our reports have a 100% sign-off rate
with the client’s accountants and HMRC.
IT BEARS REPEATING....
YOU CANNOT POSSIBLY LOSE
If we fail to find you at least £25,000 of unclaimed allowances
- You will owe us NOTHING!
How do you get your money?
Example: £1 Million of indentified Plant & Machinery claim, assuming the higher rate of corporation tax at 28%
Tax year 20%WDA Balance Tax saving
£ 1,000,000 £ 280,000
2008/2009 £ 200,000 £800,000 £56,000
2009/2010 £160,000 £640,000 £44,800
2010/2011 £128,000 £512,000 £35,840
2011/2012 £102,400 £409,600 £28,672
Total Tax saving of £165,312 over 4 years (59%)
*WDA= Annual writing down allowance
• Can claim tax back for 2 years• CA claim worked through until balance falls below £1000• Excludes AIA. You don’t have to take to full 20%
Our Terms of Business
• No report – No Fee
• No up front Fee
• No Survey Fee
• Fee 6% plus VAT of the total claim identified
– Fee paid in two parts: 7 days and 28 days
– Fees only invoiced following report acceptance by your Accountant