Since the implementation of the 2012 Finance Bill began on the 1st of April this year, commercial property owners have gained unprecedented access to tax relief which, if claimed, could bring financial relief to new buyers. However, recent data from the UK’s largest capital allowance firm Catax Solutions has revealed that only a minor percentage of commercial property owners have taken advantage of this change in legislation, with the result that a huge amount of tax relief has now been lost.
Under new laws, any commercial property owner should identify the capital allowance of their commercial property at the point of a transaction, whether this transaction is the purchase or the selling of the property in question. At this point, they are able to claim tax relief on the property – however, if this step is not carried out they will lose the tax relief forever.
Unfortunately, Catax Solutions’ research indicates that few commercial property owners are taking advantage of this regulation change, with only five per cent of commercial properties sold since the change came about having claimed the amount of relief available. This means that, during April alone, qualifying businesses or owners lost a total of £28 million due to what Catax Solutions believes is a simple lack of understanding of the new rules.
Managing director at Catax Solutions, Mark Tighe, says; “As we expected, Britain’s commercial property owners are already losing a staggering amount of tax relief due to the lack of understanding and knowledge of capital allowances, and it is extremely worrying to know that £28 million is just the start.
“This tax relief has now been lost forever, and there is no doubt now that a very large percentage of transactions will continue to take place this year without capital allowances being identified.
“It is also very worrying to know that this loss is just the start of what could be a very messy process – it is only a matter of time before finger pointing starts, and legal action will ensue as more and more property owners are affected by these losses.”
So how can a buyer ensure that they can claim all tax relief owed to them? The first stage is to read up on the clauses of the 2012 Financial Bill in order to learn exactly what their responsibilities are with regards to capital allowances; are they able, for example, to ask the seller to conduct the necessary checks or does this burden fall squarely upon their shoulders?
If in doubt, it is always best to contact HMRC or an advisor. Otherwise, commercial property owners will continue losing out on valuable tax relief.
