RLB_UK_Riders_Digest_2013

UK CONSTRUCTION INFORMATION
However, there are a number of qualifying activities which are
excluded from the EZ regime, these are:
sector,
certain activities relating to, and preparation for, the first sale of
animals or plants.
Purchase of second hand buildings (excludes residential)
Capital expenditure need not be on new items in order to qualify
for capital allowances. That is, a taxpayer incurring expenditure on
second hand assets could still claim allowances under the same
general rules as if he were acquiring the assets brand new. However,
the recent legislation changes and the introduction of the fixtures
time-limit (effective from April 2012) means that in the majority of
cases, the value of allowances needs to be agreed between the
seller and purchaser. Furthermore, HMRC must be notified, by the
purchaser, of the agreed fixtures value within 2 years of the property
acquisition, otherwise the fixtures value will be nil. In addition, the
claim preparation process differs from construction projects.
A fundamental principle of the tax system is that no more than one
person can claim capital allowances on any qualifying asset at any
one time. The result is that detailed checks must be made on all
property acquisitions to determine their tax history. HM Revenue
& Customs is entitled to reject a capital allowances claim that is
submitted without the proper research. All sale agreements should
contain the necessary contract clauses and fully completed precontract
questionnaires.
In recent years, property has often been sold with an election
between Vendor and Purchaser to agree the level of plant and
machinery in the building that is being transferred. This is usually
done at either £1 or at the tax written down value of the plant. This
ensures that the position of the Vendor is secured and that they do
not incur a balancing charge on disposal of the property.
Additional capital allowances can sometimes be available on existing
buildings where claims have previously been made and elections
signed. This is in relation to integral features assets which did not
previously qualify for capital allowances before the new integral
features rules came into effect in Finance Act 2008.
However, recent changes to the legislation, which took effect
partly from April 2012 and will apply fully from April 2014, require
a purchaser of a second hand property to submit a claim to HM
Revenue & Customs within a mandatory period of 2 years. This will
affect purchasers where the following is applicable:
1. The seller has claimed capital allowances and is required to
bring in a disposal value,
2. The seller or a prior owner have agreed a S198 election,
3. The seller has permanently discontinued their business, or
4. A tribunal has been required to determine the apportionable
sum between the seller and purchaser.
80