Capital Allowances - The Opportunity
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Transcript of Capital Allowances - The Opportunity
![Page 1: Capital Allowances - The Opportunity](https://reader034.fdocuments.us/reader034/viewer/2022052601/55987a9e1a28abb1218b47d6/html5/thumbnails/1.jpg)
We are Specialists in Reclaimingyour Capital Allowances
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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.
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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]
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What exactly is a Capital Allowance claim?
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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.
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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.
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You are not a “guinea pig” as
thousands of cases have already
been submitted and paid out.
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An estimated 96% of all UK commercial property
and furnished holiday lets have NOT claimed...
... There could be a cheque waiting for you!
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Capital Allowances are overlooked?
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BUT WHY?
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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
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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
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WHAT SPECIFICALLY CAN YOU CLAIM ON?
UK commercial Property
Furnished Holiday Lettings
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... 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
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What is FIRST FIX?
You cannot claim on these...
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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
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What is SECOND FIX?
... but you CAN claim on these.
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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
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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
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What can YOU claim on?
THE POSSIBILITIES ARE ENDLESS!
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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’.
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Purchase Price £3,200,000
Identified CA £ 800,000
Client Benefit £ 224,000
Residential Flats, held within a company
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Purchase Price £325,000
Identified CA £187,000
Client Benefit £ 74,800
Freehold Pub
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Purchase Price £325,000
Identified CA £107,800
Client Benefit £ 43,120
High Street Shop
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Purchase Price £3,178,764
Identified CA £1,226,429
Client Benefit £ 343,400
Nursing Home
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Purchase Price £1,200,000
Identified CA £ 470,000
Client Benefit £ 131,600
Office Building
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Purchase Price £11,487,230
Identified CA £ 4,190,034
Client Benefit £ 1,173,209
Hotel
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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
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Purchase Price £365,000
Identified CA £121,666
Client Benefit £ 48,666
Holiday Apartment
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Purchase Price £2,750,000
Identified CA £ 825,000
Client Benefit £ 330,000
Holiday Villa
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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
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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
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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 £££££££££££
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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
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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
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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
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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.
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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!
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How do you get your money?
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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%
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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