Finance Bill 2012 - Capital Allowances on Fixtures - Mazars - United Kingdom
Finance Bill 2012 - Capital Allowances on Fixtures
Earlier this year the Government consulted on changes to the capital allowances which give businesses tax relief on some of their expenditure on buildings. The changes had the objective of clamping down on ‘late claims’ for “fixtures” in buildings and that tax relief should be given on no more than the cost of an asset over its economic life. The draft legislation has moved on somewhat from the previous proposals.
06/12/2011
From April 2012, the purchaser of an existing building must meet certain conditions to obtain capital allowances on fixtures. Firstly the fixtures must have been included in a capital allowances claim (‘pooled’) or been the subject of a claim to first year allowances by the past owner. Secondly, the purchaser and vendor of the building will need to fix their agreement on the tax value of the fixtures by joint election within two years – and if they cannot do this it will be possible to seek a determination from the First Tier Tribunal. Unless the value of the fixtures is fixed by either of these methods, known as the fixed value requirement, the purchaser (nor any future purchaser) can claim capital allowances on those fixtures. The only concession applies where the past owner has ceased business activity, in which case the past owner will need to provide a written statement of the disposal value of those assets within two years of ceasing to own them (the ‘disposal value statement requirement’).
It will also be necessary for owners of fixtures to retain the documentation which supports their capital allowances entitlement.
These new rules even apply where the new owner cannot claim capital allowances, or has no capacity to use them, for example because of losses. If that purchaser fails to ensure that these conditions are not met, no future purchaser will be entitled to claim capital allowances on those fixtures.
We are pleased to see that HMRC have removed much of the complexity of the original proposals. Mazars, on behalf of our clients, along with many other organisations made representations to HMRC that not only were some suggestions at odds with the Government’s stated intention to simplify tax, but also the practical way their earlier proposals would work would lead to anomalous and unpredictable results. We are pleased that the Government have listened to businesses, removing many of what we saw as damaging aspects of the original proposals.
For more information contact Mike Hodges .
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- Copyright 2012 - Mazars - United Kingdom
