Capital allowances reviews

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Capital allowances reviews
  • Introduction
  • How does HMRC view capital allowances planning?
  • Potential benefits of a capital allowances review
  • Engagement terms
  • Carrying out the capital allowances review


A capital allowances review is a detailed review of expenditure with the aim of claiming the optimum amount of capital allowances. Examples of opportunities for conducting a capital allowances review include:

  • a client is relocating to another office. There will be a substantial amount spent on fitting out the new premises and new plant and machinery.
  • the owners of the company are considering selling the business or have been approached by a potential purchaser. A pre-sale ‘healthcheck’ should help streamline the due diligence process and may highlight opportunities to negotiate a higher sale price.
  • HMRC are carrying out a compliance check into the client’s affairs covering capital allowances and need to defend the filing position
  • HMRC are carrying out a compliance check and this represents an opportunity to amend for earlier years which would otherwise be ‘out of time’ (although the amount of the additional claim may be restricted). See the HMRC’s powers to open an enquiry into a return guidance note.
  • newly appointed tax advisers have identified some opportunities to increase the previous year’s capital allowances claim

Ideally, clients would contact their tax advisers at the first opportunity to discuss planned expenditure at an early stage, however tax planning is not always a high priority. The key action is to always talk to clients in order to find out how their business is developing and identify opportunities for value-added work such as capital allowances reviews.

For further guidance relevant to capital allowances reviews, see the following guidance notes:

  • Capital allowances ― introduction
  • Definition of plant and machinery
  • Capital allowances computations
  • First Year allowances and

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