Probably the best way to understand
capital allowances is to visualise
yourself physically turning a hotel, bar
or restaurant upside down and then
shaking it quite hard. In essence, anything
that wouldn’t fall out is what you can
claim capital allowances against.
Now Capital Allowances are obscure at the
best of times but they can be extremely
lucrative when identified. The average
net benefit we uncover is worth £46,000,
with the rebate usually received from
HMRC in the form of ongoing tax relief or
a cash lump sum. So it’s vital people and
businesses that own commercial property
in hospitality are aware of them.
However, it can be a lot more than that.
For example, a hotel in Cambridgeshire
instructed us to carry out a Capital
Allowances audit. Having surveyed
the property in detail, which they had
purchased for £1,100,000, we discovered
£207,000 of unclaimed capital allowances
in the building’s intrinsic fabrication –
related to foul water disposal and
That was a 19% proportion of the original
purchase price of the hotel. The net tax
benefit to the owner, at their higher tax
rate, was £83,000 (40% of £207,500.) I know
for a fact that the repayment has made a
real difference to their business.
It is also worth mentioning that
following fairly recent changes to tax law
it has become even more important for
hospitality businesses to have Capital
Allowances firmly in their thoughts. Any
unclaimed relief must now be identified
and documented before or at the point at
which a commercial property is bought or
sold – or it will be permanently lost.
So what’s the process of identifying
unused Capital Allowances? Here at
Catax, we start by establishing the
history of the property.
First, we look at the hospitalitytoday.com
details of any prior | 11
claims made by an accountant. If we
conclude unclaimed capital allowances
do exist, then we carry out an in-depth
forensic survey of the entire site.
We then produce a report that details
the reasons for making a claim on items
within the property. It is then sent to the
client’s accountant along with guidance
on how to submit the claim to HMRC.
Catax will only charge a fee if the
unclaimed allowances that have been
identified amount to over £50,000.
This means there is no risk and no
upfront costs for any hospitality
businesses that work with us.
In the end, capital allowances are a right
and not a privilege. If hotel, restaurant
or B&B owners have incurred the costs
of buying, building or adjusting their
building – they deserve the tax benefit.
So be sure to put in for yours today.
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