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Page 6 November 1st 2010Email: warehouse@flame1.com INDUSTRY NEWSTel: 01923 272960TAXING TIMES... BUT RELIEF IS AT HANDJonathan Medes of TenterdenConsulting looks at some of the opportunitiesfor claiming tax relief forinvestments in capital assets in thelogistics & warehousing sector.The economic challenges of the past24 months have impacted on all businessesand as a result businesses arelooking for more opportunities toreduce costs. Tax is a major cost facedby all businesses, whether it is increasesin fuel duties, employer national insurancecontributions or stamp dutythresholds for property acquisitions.Taxation is of course necessary as thegovernment cannot even begin to balancethe books without considerableincome from taxation.For many businesses capital expenditureprogrammes have been put on holdfor the past 24 months, however, thiscannot last indefinitely if businesseswant to compete in the marketplace.Capital assets also wear out and becomeobsolete over time thereby making continualinvestment in new capital assetsnecessary for survival. There are ofcourse many ways to recoup part of thecapital cost for investing in new capitalassets. This article looks at some of thepotential tax reliefs which are availableto businesses in the logistics & warehousingsector, many of which areoverlooked or significantly underclaimed.Capital allowances are the mechanismby which the government allows businessesto claim tax relief for capitalassets, i.e. those assets which areacquired for the long term use in thebusiness, and set this off against taxableprofits. The obvious expenditure whichattracts capital allowances, for example,trucks, computers, warehouse rackingetc, is generally identified by theaccountant/tax adviser and capitalallowances are claimed accordingly inthe tax return. However, there are manycapital assets which are inherent withinbuildings which attract capitalallowances and these are often overlookedby the accountants/tax advisers.There are various reasons why suchassets are overlooked, the main reason isperhaps the complexity of the rules surroundingcapital allowances which seemto change with each new tax year.Capital assets inherent within buildingswhich may attract capitalallowances include: electrical systems,air conditioning/ventilation equipment,warehouse racking, fire alarm systems,security systems, sprinkler & fire suppressionsystems etc. There are differentrates at which the tax relief is givendepending on the asset in question (andin the case of some assets depending onwhen the expenditure was incurred) andthis is perhaps where the confusionstarts. On top of this is a further set ofrules providing accelerated tax reliefs forcapital expenditure incurred on environmentallybeneficial and energy savingassets. In some cases, repayments of taxin the form of tax credits can be claimedfor expenditure incurred on environmentallybeneficial and energy saving assets.In addition to the above, there is alsotax relief available for expenditureincurred on the remediation of contaminatedland (equal to 150% of theexpenditure incurred) and capitalisedrepairs.For the logistics and warehousingindustry, a considerable proportion ofthe expenditure incurred in acquiring,developing, fitting out or refurbishingwarehouse or distribution facilities, particularlythose with temperaturecontrolled environments, will attract taxrelief in one form or another. However,many qualifying items of expenditureare commonly overlooked due to a lackof supporting information or insufficientknowledge of the rules relating to taxreliefs for capital assets.By way of example, a situationwhich many tenants may be familiarwith is as follows:• A warehouse developer agrees todevelop a warehouse facility to anagreed specification and the tenantagrees to enter into a lease and payrent in respect of that facility.• The tenant then separately agreeswith the developer for certain tenantenhancement works to be undertaken to enable the facility to beadapted to meet the tenant’s traderequirements and in return thetenant agrees to pay an additionalcapital sum to the developer forthose enhancement works.• The work is completed and thedeveloper hands over the facility tothe tenant.• Sometime later, the tenant preparesits tax return for submission to HMRevenue & Customs, however, dueto staff changes there is no onearound who remembers what thecapital sum paid to the developer,for the tenant enhancement works,actually relates to and the tenantultimately misses its opportunity toclaim tax relief in respect of aconsiderable proportion of thecapital expenditure incurred onthose tenant enhancement works.The above example is not uncommon,however, in the current economic climateit is worthwhile spending a bit more timetracking down the correct supportingdocumentation to ensure that claims fortax relief in respect of capital assets arefully maximised. Even where expenditurewas incurred in a prior year there islikely to be opportunities to claim taxrelief and in some cases receive a repaymentof tax from HM Revenue &Customs.TAX RELIEFS FORENVIRONMENTALLY BENEFICIALAND ENERGY SAVING ASSETSAs previously noted, there areenhanced tax reliefs for expenditureincurred on qualifying environmentallybeneficial and energy saving assets. Thetax relief that can be claimed is equal to100% of the cost of the asset in year 1.Taxpayers often overlook claims for taxrelief in respect of such assets, similarlymany product manufacturers also do notmake purchasers aware of the acceleratedclaims for tax relief that can beclaimed for qualifying assets. Forexample, in certain cases lighting canqualify for tax relief in full under theprovisions for energy saving assetsalthough to date many taxpayers havenot yet claimed the enhanced tax relief towhich they are entitled.In certain circumstances, it is possibleto claim a tax credit (tax repayment) forexpenditure incurred in respect of environmentallybeneficial and energy savingassets equal to 19% of the cost of theasset. When factored into the initial costof purchasing the asset the result is aconsiderable reduction to the capitaloutlay. When the efficiency gains, reductionsin the carbon footprint and taxbenefits are all taken into account taxpayerscan gain considerable benefits byinvesting in qualifying energy efficientassets even where the original capitalcost is higher when compared with noncompliantproducts.WHAT DO I DO NEXT TO ENSURE IHAVE MADE THE MOST OF THERELIEFS AVAILABLE?If you are an owner/occupier of awarehouse or distribution facility thenyou may be missing out on significanttax reliefs on your capital assets. If yourbusiness has incurred capital expenditurein acquiring, developing, fitting outor refurbishing property in the past 10years then it is likely that tax reliefs canstill be claimed even if the expenditurerelates to tax return periods that arenow closed. Tenterden Consulting specialisesin helping taxpayers maximiseclaims for tax relief in respect of capitalexpenditure. If your business is currentlyincurring or is planning to incurcapital expenditure on property relatedassets then Tenterden Consulting canassist you with maximising your claimsfor tax relief.Jonathan Medes is the managingdirector of Tenterden ConsultingLimited and can be contacted onjonathan@tenterdenconsulting.co.ukor alternatively visit the website atwww.tenterdenconsulting.co.ukASTEC CONVEYORS DEVELOPMENTPART OF STRATEGIC PLAN FOR THE FUTUREAs part of ongoing development ofthe business and premises of AstecConveyors Limited, based in Swadlincote– Derbyshire, the company hasannounced the completion of a majorrefurbishment to the factory and officesthat has taken months to complete.Having acquired the site back in 2002from a former fabrication company, Astecset about expanding the facilities tocreate more storage and workspace areawith the introduction of a new 4000 sq ftmezzanine floor. This was shortly followedby the introduction of a £165kTrumpf CNC Punch and a new 160 tonneBystronic CNC brake press, plus pretreatmentand powder coating plant thatmade them totally self sufficient in thedesign and manufacturing of conveyormodules, bespoke equipment and completeturnkey materials handling systemsin-house.This final stage of the developmentplan has seen a total transformation ofthe building’s exterior, including newbrickwork, hardware fittings and completere-cladding and insulation to ecospecifications. As part of the plan, additionalclear roof panels allowed for a 20%increase in natural daylight and contributedto savings in the carbonfootprint.Internally, the original offices havebeen totally gutted to provide a new featurereception area, modern offices andmeeting rooms that maximize on theamount of natural light the interiorreceives.Adrian Smart, Astec ConveyorsManaging Director reported, "When wedecided to acquire and move to the currentsite, we had a strategic plan for thefuture of Astec Conveyors and that was toinvest and become totally self sufficientand provide a proficient ‘one-stopsource’ for conveyors and integratedmaterial handling solutions.With major investment in the manufacturingside of our business completed,the time was right to refurbish the exteriorof the factory to reflect thecommitment and professionalism of theoperation, whilst modernising internalworking conditions to create an attractiveenvironment in which to work.With more than 100 years combinedexperience within the materials handling,process and packaging industry, AstecConveyors have established a core of regularsatisfied customers who providerepeat business and are keen to offerreferrals, which reflects their confidenceand enabled us to control our expansion.From originally supplying equipmentto other OEM’s, Astec Conveyors diversifiedto capitalise on its wealth ofexperience to provide end user customerswith conveyor systems andbespoke products such as conveyingdividers/combiners, counter balancedpallet lifts, elevators/lowerators, etc,through to complete turnkey sortationhandling systems. Everything is managedin-house, even down toundertaking functional design and electricalspecifications.Astec Conveyors work very closelywith the customer to provide scheduledservicing arrangements as required andwhere necessary, have even been calledupon to relocate equipment and productionlines within a factory or even to othersites. When it comes to servicing the customer,Astec are always prepared to gothat extra mile and as a result, we canconfidently boast of having a healthyorder book.This substantial investment by AstecConveyors Limited goes further than cosmeticimprovements and is part of thecompany’s development strategy that willhopefully maintain and instil confidencein our existing and potential customersand sends a positive message to theindustry.”ASTEC CONVEYORS LTD TEL: 01283 210333 EMAIL: SALES@ASTECCONVEYORS.COM WWW.ASTECCONVEYORS.COM