Capital
Allowances on Property Transactions
The Issue
The Issue
Following the changes to capital allowances in April 2012, the
second element, the ‘pooling requirement’ comes into effect for all second hand
property transactions from April 2014. This will require capital allowances to
be dealt with as part of the purchase transaction if the right to claim is not
to be lost by the buyer going forward. In the past it was possible to undertake
a retrospective capital allowance claim but from 1st April 2014 it
will no longer be possible.
What is the pooling requirement?
The vendor must have pooled its expenditure on fixtures in a chargeable period
before the building is sold. Pooling expenditure means that either:
- the seller claimed capital allowances on the asset; or
- the expenditure has been added to the plant and machinery pool, but no claim has been made.
How can we help?
Holloway, Iliffe & Mitchell can help vendors ahead of any
planned transactions, but it is important to act early in the transaction
process. Most importantly, vendors should undertake a capital allowance review so
that their property is not de-valued in the eyes of the buyer. On average the length
of time for making a claim is two to three months so this should be a priority
as soon as a transaction is proposed or if a transaction is already underway in
case completion does take place before 31st March.
We work with a number of tax specialists across the region so
can assist in preparing a full review for you to ensure that any imminent
transactions are full accounted for in terms of capital allowances provisions.
Introduction of Commercial
Rent Arrears Recovery.
The Issue
A landlord’s ancient right of ‘distress’ as a means of recovering
rent arrears is to be abolished from 6th April 2014. The major
changes between the existing law and the income Commercial Rent Arrears
Recovery (‘CRAR’) are:
Landlords will have to give notice to tenant removing the ‘shock
and awe’ factor of having a bailiff arrive unannounced – if a tenant is given 7
days’ notice of a bailiff visit (which is required under the new regulations)
they may disappear or not be there when the bailiff visits making it impossible
to take the intended action against them. Only in exceptional circumstances may
a court reduce the notice period
Until April landlords can to look to recover goods to the value of
the outstanding rent, insurance, service charge and any other sums due under
the tenancy agreement. However, under the new scheme only rent – plus
associated VAT and interest – can be demanded by a bailiff which may encourage
tenants to not pay their service charge and ultimately if the property were to
become vacant the landlord would be liable to top-up any service charge arrears
to ensure that sufficient funds are available to maintain the service charge
funds.
At present money can be demanded immediately. From April a rent
sum equivalent to at least 7 days being overdue will be required before action
can be taken.
Properties that have a mixed commercial and residential use under
the same tenancy will not be eligible for CRAR procedures and landlords should
consider separate tenancy agreements in future.
Goods that are required for the tenant’s trade up to a combined
sum of £1,350 cannot be taken – currently all tools of the trade are exempt.
How can we help?
Holloway Iliffe & Mitchell has an experienced pro-active
management team whose knowledge and understanding of properties it manages
means that the danger of landlords not being paid rent owing is largely
reduced.
For more information on either of these topics contact:
Stuart Mitchell on stuart@hi-m.co.uk or Craig Powell on craig@hi-m.co.uk
