How to conduct a capital allowances review

By Tolley in association with Martin Wilson, the Capital Allowances Partnership Limited

The following Corporation Tax guidance note by Tolley in association with Martin Wilson, the Capital Allowances Partnership Limited provides comprehensive and up to date tax information covering:

  • How to conduct a capital allowances review
  • Specialist advice
  • Fit-outs
  • Acquisitions

The way you carry out a capital allowances review will depend on many factors, eg the purpose of the review, the type of business and not least the preferences of the company’s directors.

Specialist advice

Depending on the complexity of the review, it may be appropriate, or even essential, to involve a capital allowances specialist. There are many firms claiming to be capital allowances specialists and there is need for caution when making a choice. Traditionally, capital allowances specialists have come from a professional background and will typically be chartered accountants or chartered surveyors with tax qualifications. However, many of the more recently established firms come from a background of general claims (eg PPI claims) and HMRC has stated that many of them do not have the required specialist expertise. For this reason, such firms often use undisclosed subcontractors, eg general practice surveyors with no particular understanding of capital allowances or taxation generally.

The danger of using a non-specialist is that claims may not be as robust as they should be in the event of HMRC enquiries, and in some cases legal requirements (for example, the need for an election or Tribunal application under CAA 2001, s 187A) may not be met. Often claims will be prepared on an aggressive basis which does not comply with the underlying law and hence risks damage to the company’s reputation. Incidentally, the fees charged by non-specialist firms are often well above the market rate, so alternative fee proposals should always be sought as a benchmark.

It is therefore safest when selecting a specialist to choose one with professional qualifications and with a proven track record. Sadly, some specialists exaggerate their abilities, their size or the time they have been established. It is best advised to seek references or other evidence in the form of published books or articles. These are preferable to endorsement by

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