About The Claim
Our client, who owns River Cottage, a furnished holiday let (FHL) in Ashford in the Water, Bakewell, faced an opportunity and challenge. They purchased the property in April 2021, which had been operating as a holiday let but was originally bought by the vendor in 2007. Their claim aimed to maximise capital allowances based on both the general pool and special rate pool, which had not been utilised by the vendor.
The challenge lay in distinguishing between items that the vendor could have claimed and those that could not be included in the S198 Election. This differentiation was particularly crucial for improvements made by the vendor after April 2008 when new legislation came into effect. The claim also required the correct identification and calculation of special rate pool allowances, taking into account items that qualified both before and after April 2008.
Our Approach
To address these complexities, we adopted a thorough and strategic approach:
- Ownership and Cost Analysis: We initiated the process by reviewing the property’s ownership history and the expenses incurred by the vendor. This analysis laid the foundation for the claim.
- Detailed Property Survey: Our team conducted a comprehensive survey of the entire property. This included identifying and valuing each item within the FHL.
- Legislation Compliance: We meticulously analysed the claim to ensure it adhered to all relevant legislation, including the S198 Election.
- S198 Election and Claim Summary: We facilitated the creation of an S198 Election for the vendor to sign over the applicable allowances to our clients. Simultaneously, we compiled a detailed claim summary, outlining the total claim and how it could be integrated into our clients’ tax returns.
Our efforts yielded significant results for our client. By making the best use of the available tax relief, they maximised their capital allowances, receiving £115,283 in deductions. This not only optimised their tax position but also contributed to substantial tax savings of £24,279.
Examples of some of the embedded qualifying items that we found...
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LPG Tanks
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Shower units with plumbing
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Kitchen units and fittings
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Decorative wall lighting
An observation from our Chris Roberts, Our Managing Director...
“This case emphasises the critical importance of S198 Elections when purchasing a property that already qualifies for capital allowances. With a two-year deadline for submitting these elections to HMRC, it is imperative to consider this aspect right from the outset of a property sale/purchase transaction. This case underscores the potential tax benefits that can be unlocked with careful planning and expert guidance, even when the property has changed hands over time.”
“I was pleased with the overall results. The survey process was very thorough and the reports that we received at the end held a lot of detail. I would happily recommend the CARS team to others!”
Nick C.
“After the claim was completed I was left with a client that was happy with the results. The communication was really good from the team and it gave me the confidence that they had everything under control. Overall, a great success!”
Andrew Sharkey | Director
Andrew B Sharkey Ltd
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