Plant the seeds for business growth this spring with Mazars' top ten cost saving tips for property developers - Mazars - United Kingdom

Review your firm’s tax strategies ahead of the upturn with the 10 Rs

With money tight, giving your business a tax and property ‘makeover’ could quite literally net property developers millions of pounds in additional revenue, believes international accountancy firm Mazars.

Head of Property and Construction at Mazars, Stacy Eden offers 10 pieces of timely advice for developers to boost cash flow at a time when it is needed the most. Asset finance, restructuring the company and even expansion on to land qualifying for tax credits are among the strategies to streamline operations.

If the bank refuses to extend your credit lines, sale and leaseback of assets, could be an alternative way to release cash from your business. Leasing key equipment like a company car instead of tying up cash could also is another way to bolster company cash flow.

With property and asset values tumbling, firms could consider restructuring to reposition tax affairs more efficiently ahead of any upturn. For example, transferring ownership of assets to children or family members as part of an inheritance tax mitigation strategy is one option. Group de-mergers might also be considered or transferring properties out of a company so that ownership could be held directly by one company employee is another.

The Mazars Top Ten Tips to Re-invigorate Your Business

• Restructure – Asset prices have fallen so reorganise your firm to capitalise on tax efficiencies like IHT mitigation.
• Re-use – By developing property on contaminated land you can claim a ‘land remediation credit’ equal to a tax repayment of 24p in every £1 spent.*
• Re-finance – Sell and lease back company assets for cost and tax savings or borrow against assets held by your firm to boost cash flow.
• Retirement plans – Sell the commercial property in the company to your pension scheme and lease it back to shelter future income from tax.
• Refund – Energy saving plant and machinery bought after April 2008 could be liable for a tax credit if a company is making losses.**
• Residential – If you can convert a commercial building to a residential one, the conversion could be zero rated for VAT purposes.
• Renting over selling – If you let instead of sell a residential property after development, take advice to avoid repaying VAT on build expenses.
• Renovation – Make sure to use your Business Premises Renovation Allowances at up to 100% on renovation work in designated disadvantaged areas.
• Relief – Review company properties to make sure they qualify for relief under Inheritance Tax rules.
• Recapitalise – Maximise all capital allowances claims as the legislation has recently changed.

Says Stacy Eden, Head of Property at Mazars: “For property businesses to flourish, especially at the moment, turning the labyrinth of property tax law in the UK to their advantage is essential.

“Even for firms maintaining growth in the downturn, there are tax efficiencies or restructuring moves the finance department may not have considered.

“For those struggling with cash flow or simply looking to streamline costs, getting the right advice from Mazars ahead of any restructuring could save your firm huge costs now and well into the future,” he adds.

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* Land Remediation Relief: 150% relief is available from computing taxable profits of the trade or business on "qualifying expenditure" for cleaning up the land when it was acquired in a contaminated state for development. If in an accounting period a company has a “qualifying land remediation loss”, it may claim a “land remediation tax credit” equal to 16 per cent of the amount of that loss - effectively a tax repayment of 24p in the £.

** After April 2008, tax credits were made available for expenditure on energy saving or environmentally beneficial plant or machinery for companies making losses equal to 19% of the equipment cost up to £250,000.

Companies should consider whether any claims could be made for expenditure incurred to date and consider the availability of this relief when planning future capital expenditure.

About Mazars:

A jpg image of Stacy Eden is available on request.

Mazars is an international firm specialising in audit, tax and advisory services that operates as an integrated partnership in 50 countries worldwide.

In the UK, Mazars is the eighth largest partnership in terms of audit fee income, has the fastest growing tax practice amongst the Top 20 firms, and was named ‘Large Firm of the Year’ at the Accountancy Age Awards 2008.

The firm employs more than 1,000 people and has over 100 partners based in 17 offices throughout the UK.

Clients include international corporate groups and listed companies (17% of the FTSEurofirst 100), public sector bodies, a wide range of owner-managed businesses (some of the UK's fastest growing entrepreneurial businesses as measured by The Fast Track 100) and numerous private individuals.

Mazars reported a global turnover of €745 million for the year ended 31 August 2008, and is a founding member of Praxity, a worldwide alliance of independent accounting firms.