The Benefits of Early Engagement in Capital Allowances
How can the buyer benefit?
By conducting thorough public file research and instructing solicitors to gather essential information about the seller’s capital allowance position, the buyer was able to benefit in several key ways:
- Tailored Contract Provisions: Provisions specific to the capital allowances of the transaction were inserted into the Purchase Contract to safeguard the buyer’s position.
- Valid Section 198 Election: A Section 198 Election was prepared and carefully checked. This ensures that it meets legal requirements and could be used to claim the available tax relief.
- Additional Tax Relief: Beyond the Section 198 Election, we were able to secure additional tax relief on the buyer’s purchase costs, enhancing the overall benefit to the client.
The accountants and solicitors involved ensured that this element of the transaction was managed smoothly. Therefore minimising disruption while securing maximum tax relief for the buyer. This case underlines the importance of engaging a capital allowance consultant early in the process, whether you are the buyer or seller.
Why Timing is Crucial
The 2-year window
The legislation provides a two-year window post-completion to claim capital allowances. However, leaving the process until after completion can complicate negotiations and potentially close the door on valuable tax relief. In this instance, the involvement of capital allowances experts at the early stages was key to securing the optimal outcome for the buyer.
As soon as an offer is accepted and advisors are engaged, it is essential to bring in a specialist capital allowances consultant. This ensures that all opportunities for tax relief are explored and secured from the outset.
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Testimonials from the Client and Advisors
The Client – Dr Mahyar Bettany of Adroit Group Dental Limited
“We had a good experience working with the CARS team. They provided the right advice which was adapted to our particular claim. We were pleased with the outcome, and it was reassuring to know that all our advisors were doing everything they could to take care of our needs.”
The Solicitor – Paul Shinwell, Partner at Abrahams Dresden LLP
“We understand the importance of capital allowances and equally understand the importance of drafting in the right experts to support where required. CARS were great at directing the correct action and reviewed key documentation to ensure the correct approach was taken for our client. Having this kind of support is valuable and we appreciated the help in providing the best service for our client.”
The Accountant – Tom Slevin, Client Services Director at DJH
“CARS has been on hand to support us with a few clients now. We are familiar with the need for a trusted capital allowance advisor to help enhance claims for clients. CARS have the technical knowledge and resources to provide valuable advice.”
A Valuable Lesson
A proactive approach to capital allowances during property transactions is crucial for maximising tax relief. Engaging the right specialists early in the process helps ensure all opportunities are captured, leading to better financial outcomes for buyers. With the right advisors in place, capital allowances can be a valuable tool in reducing costs and increasing long-term profitability.
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