I began using the acronym PEFFs, which stands for ‘Property Embedded Fixtures & Fittings’, to help better explain to my clients an aspect of capital allowances that is frequently missed.
Capital allowances will routinely be claimed on ‘movable’ items that are evidenced on the invoice. This includes common items you find in the workplace such as desks, computer equipment, and furniture.
The plant and machinery (or as I like to call them PEFFs) are the embedded elements in the building, that are rarely detailed on an invoice and so are overlooked.
The keyword in all this is Embedded. These embedded items maybe screwed in, nailed in, plastered in, or sometimes even bricked in. A lot of people think they are simply part of the building but they are so much more than that. They are a significant tax benefit which is all too often overlooked.
These ‘immovable items’ can take the form of many different parts of the building but common cases are heating and air conditioning systems, security cameras, lifts and much more.
Capital Allowances are part of the standard tax legislation
HMRC does not take issue with Property Embedded claims on the basis we adhere to guidelines and the legislation applicable to each case. We maintain an experienced multidisciplinary team of experts ensuring a solid track record and reputation are protected – we even have an ex HMRC inspector as one of our team.
So why do they get missed so often?
The answer is actually quite a simple one. Most UK Tax Payers do not fully understand or appreciate what is meant by the term ‘Plant and Machinery’ and most Accountants genuinely feel that they have dealt with all the capital allowances available to their clients, based on the information they have received.
An example of this in practise would be the refurbishment of an office. Without understanding exactly what capital allowances are being installed, the details are not complied, the information is not passed onto the accountant and the tax benefit for the refurbishment is lost. The same would apply for a new build property or if an existing property was getting an extension.
A claim to capital allowances is usually done on the evidence of an invoice so what if there is no detailed invoice? Again, the answer is simple – a claim is not actioned. This is where PEFFs become significant.
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Our expert team are here to help answer any of your capital allowances questions or enquires you have about your commercial property.