Capital allowances reviews

Produced by Tolley in association with Martin Wilson and Steven Bone

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Martin Wilson and Steven Bone provides comprehensive and up to date tax information covering:

  • Capital allowances reviews
  • Introduction
  • Potential benefits of a capital allowances review
  • Optimisation of capital allowances claim
  • Engagement terms
  • Capital allowance reviews and specialist advice
  • Fit-outs
  • Preparation
  • Carrying out the exercise
  • Acquisitions
  • More...

Capital allowances reviews


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

  1. your client is acquiring new premises. A substantial part of the purchase price may be apportioned to fixtures qualifying for tax relief, and / or the entitlement to allowances may need to be safeguarded by the inclusion of capital allowances clauses in the purchase contract

  2. your client is relocating to new premises. There will be a risk of previous allowances being clawed back on the sale of the current premises unless proper planning is undertaken. In addition, there may be a substantial amount spent on fitting out the new premises and on the new plant and machinery

  3. the owners of the company are considering selling the business or have been approached by a potential purchaser. A pre-sale health check should help streamline the due diligence process and may highlight opportunities to identify additional tax savings before sale, or to negotiate a higher sale price

  4. HMRC is carrying out a compliance check, not necessarily covering capital allowances, and this represents an opportunity to amend returns for earlier years which would otherwise be out of time. See the HMRC’s powers to open an enquiry into a return guidance note

  5. you have been newly appointed as the client’s tax advisers and have identified some opportunities to increase previous years’ capital allowances claim (or to identify instances where there is a risk of HMRC making a discovery assessment)

Ideally, clients would contact their tax advisers at the first opportunity to discuss planned expenditure (or property sales) at an early stage; however, tax planning is not always a high priority. The key action is therefore to regularly contact clients in order to find out how their business is developing and identify opportunitie

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