What is CPSE?
Commercial Property Standard Enquiries (CPSE) is a document passed from seller to buyer. There are numerous sections that look to extract information from the seller regarding important aspects of the property and transaction.
Within the CPSE, Section 32 specifically pinpoints the area of Property Capital Allowances. This section looks to gain an understanding of the seller’s capital allowance position for the embedded fixtures and fittings, not the moveable furniture and equipment.
Below is version 3.9 of the CPSE.1 Section 32 with guidance notes for each question:
Section 32 Capital Allowances
NOTE: In this enquiry, “32 plant and machinery fixtures” means plant and machinery fixtures at the Property.
Do you hold the Property on capital account as an investor/ owner-occupier, or on revenue account as a developer/ property trader as part of your trading stock?
Please specify which.
A yes or no answer is not appropriate.
State: Investor, owner- occupier or stock.
If the Seller is holding the Property as a trader as part of the trading stock, because, for example, the Seller is a developer or dealer, it will not have been able to claim capital allowances as any expenditure incurred will not have been on capital account.
However, the remaining enquiries in section 32 should still be answered as there may be relevant information relating to an earlier owner of the Property.
Have you claimed capital allowances on plant or machinery fixtures or allocated any expenditure on such fixtures to a capital allowances pool? If so, please answer the supplementary questions in enquiry 32.9 in respect of that expenditure.
This requires only a yes or no answer and is in respect of property inherent fixtures only, not moveable plant & machinery e.g. chattels.
Is there any expenditure on plant and machinery fixtures that you have not pooled:
(a) Will you do so if the Buyer asks you to?
(b) If so, by when?
(c) If not, why not?
If the Seller could, but does not pool the fixtures, no capital allowances can be claimed by the Buyer or any future owners of the property in respect of those items that could have been pooled by the seller. They will be lost forever.
If you bought the Property and cannot pool any expenditure on plant and machinery fixtures:
(a) Please provide the name and contact details of everyone who has owned the Property since April 2014;
(b) Please provide evidence that the most recent previous owner who was entitled to claim allowances pooled any expenditure on plant and machinery fixtures? Please answer the supplementary questions in enquiry 32.9 in respect of that previous owner’s expenditure.
Some property owners may be unable to pool the fixtures, for example they may be non-UK taxpayers. If so, the first owner of the property after April 2014 may claim for the unclaimed fixtures then the new rules apply from then on.
Please provide details of any plant and machinery fixtures which were paid for by a tenant, including any contributions made by you towards their cost.
This ensures future owners of the investment property do not claim capital allowances on fixtures installed and paid for by the tenant.
Please provide details of any plant and machinery fixtures which are leased to you by an equipment lessor.
This ensures capital allowances are not claimed for leased fixtures for which title remains with the lessor.
If the transaction is the grant of a new lease at a premium, and you are entitled to do so and the Buyer asks you to, will you enter into a Capital Allowances Act 2001 Section 183 Election for the Buyer to be treated as the owner of the plant and machinery fixtures for capital allowances purposes?
The Section 183 Election passes the right to the capital allowances on fixtures embedded within the property from the lessor to the lessee. It must be entered into within 2 years from the grant of lease.
Please provide details of any expenditure on plant and machinery that you have treated as long-life assets, or any expenditure upon which you have claimed another type of capital allowances (for example, industrial buildings allowances, research and development allowances, business premises renovation allowances and so on).
A list is required of assets which have had tax relief under any other type of capital allowance regime, so that the Buyer can ensure assets are treated accordingly in future, with no duplication of claims.
For each plant and machinery fixture for which a claim has been made or expenditure has been pooled, please:
(a) Provide a description of that fixture;
(b) State when that fixture was acquired;
(c) State whether that fixture was installed by you, or already installed by a previous owner (please specify which);
(d) State the amount of expenditure pooled in respect of that fixture; and
(e) (where enquiry 32.2 applies) confirm that you will enter into a Capital Allowances Act 2001 Section 198 Election in that amount (or another appropriate amount, to be agreed) if asked to do so by the Buyer.
(f) (where enquiry 32.4 applies) confirm whether the most recent previous owner who was entitled to claim allowances entered into a Capital Allowances Act 2001 Section 198 Election and, if so, in what amount.
This enquiry is only to be answered where expenditure on plant and machinery fixtures has been pooled by the seller (see enquiry 32.2) or a previous owner (see enquiry 32.4).
In relation to capital allowances on structures and buildings (SBAs):
(a) Does the property qualify for SBAs?
(b) If the answer to (a) is yes, then please state: the total qualifying expenditure for SBAs; the dates when such expenditure was incurred and by whom; the amounts of SBAs that have been claimed to date, by whom and when; the current residue of qualifying expenditure; together with all supporting evidence as required by the relevant legislation; and please provide an “allowance statement” as mentioned in section 270IA Capital Allowances Act 2001.
Structures & Buildings Allowance (SBA) only applies to property build projects that started after October 2018.
SBA only applies to property expenditure. For further information visit our SBA’s page.
Please provide the name and contact details of your capital allowances adviser. Please confirm that we may make contact with him/her in order to obtain information about the matters dealt with in this enquiry 32.
It is advisable to include an expert:
Capital Allowance Review Service
0330 174 1339