HMRC propose changes to "fixtures" for Capital Allowances
On 6 December 2011 HMRC published draft legislation which included clauses to change the way “fixtures” are dealt with for capital allowances. This followed a Consultation process over the Summer.
The good news is that no changes have been made to “retrospective claims” – what this means practically is that it is still possible to make claims for Capital Allowances in respect of historical expenditure no matter when it was incurred. So, if a building was acquired in, say, 2002 it is still possible to make a capital allowances claim now in respect qualifying fixtures within the building so long as the building is still owned.
There will, however, be changes to how capital allowances are dealt with on acquisitions after 6 April 2012 (1 April for companies) as “mandatory pooling” is being introduced – ie the expenditure qualifying
for capital allowances has to be identified before an onward sale of the property. If a purchaser of a property wants to claim capital allowances on fixtures then the vendor has to have “pooled” the qualifying expenditure irrespective of whether they want or need the capital allowances. If the vendor does not pool such expenditure then the purchaser cannot claim capital allowances on those fixtures.
Furthermore, when a building is sold, the vendor and purchaser need to sign a “Record of Agreement” within two years of the transaction to fix the value of fixtures – this value does not have to be the tax written down value but it is left to the discretion of the two parties to agree.
Our comments can be seen here.
12 December 2011
Who to contact?
For further information contact Craig Hughes on 07717 840596 or email chughes@edftax.co.uk.