About the Claim and Challenges
Our team was approached by Aero Research Partners Ltd who had undergone a significant project to develop a testing facility for aerodynamic research. They were seeking advice to maximise the tax breaks available against their expenditure. The site they developed was a former Victorian 2.7km long railway tunnel converted into a vehicle performance testing station with associated buildings. The challenge was to clean up and dry out the tunnel before any fitting out could occur, then create a safe environment for the activity. This included ventilation, flood prevention measures, specialist surfaces, and bat remediation work. It also included the construction of an ancillary building for meetings and administration.
An observation from our Claims Analyst, Christine Hunter...
“We accurately accounted for the grant received for tunnel remediation and identified all qualifying expenditures, including items that qualified for structures and buildings allowance. By optimising the claim with attention to bespoke items and reclassifying certain costs as revenue expenses, we secured impressive tax relief for the client. The results exemplify our expertise in maximising capital allowances and benefiting our client’s financial position.”
Our approach encompassed several key steps to maximise capital allowances and optimise tax relief. We carefully considered the grants received for the development as part of our analysis as this can impact the possible tax breaks. Having experience in reviewing grants and how they interact with legislation ensured accurate and comprehensive calculations.
After collating detailed information and carrying out site inspections of the site, we meticulously identified and analysed all expenditures that qualified for tax relief via capital allowances. This includes structures & buildings allowance, super-deduction, and annual investment allowance. We also factored repairs & renewals into our calculations.
Examples of some of the embedded qualifying items that we found...
Specialist alarm systems
Waterproofing and cabling
Powered ventilation systems
It's important to note...
In this case, significant costs were incurred on systems/infrastructure that had a key function for this trade to operate. However, some of these costs did not qualify for tax relief via First Year Allowances. Understanding the function of an item is crucial however, understanding legislation is equally as important.
The outcome of our approach yielded significant results for the client. A capital allowance claim of £1.6 million, a Structures and Buildings Allowance claim, which was approximately £100,000, and a re-classification of items as revenue costs, which was £281,000. These results showcased the successful identification and optimisation of capital allowances, enabling the client to benefit from substantial tax relief and improve their overall financial position.
“Our experience working with the CARS team was good overall. We tend to prefer to work with independent companies that are specialists in their field rather than engaging with big, expensive general accountancy firms, so the fact that CARS ticked those boxes suited us perfectly. The people were great and easy to work with. It was good to be able to talk directly to those that were working on the claim. We also appreciated the flexibility when it came to paying fees. We’re newcomers to the world of CA so the idiosyncrasies of this tax break appear pretty baffling, therefore we were a bit worried about what kind of level of detailed information the team would need but this was unfounded – they seemed happy with the supplier invoices and breakdowns we had. I would happily recommend them to others.”
Matt Cross | Director