Capital allowances 'a right not a privilege': another service to offer

Capital allowances 'a right not a privilege': another service to offer


Every time a commercial property owner spends money buying or improving his property, there is a strong chance they can offset that expenditure against profits or general income for tax purposes – a little tapped resource offered by the Inland Revenue.

Indeed, the ability to claim capital allowances on commercial properties has been available to property owners since 1878, yet HMRC estimates a massive 96% of those eligible for a refund have not claimed.

Aware that the process of claiming such a tax rebate is not straight forward, Bridging and Commercial

decided it time to speak to the experts and learn how advisors can start offering this service to clients.

“HMRC has made claiming very complicated,” explains Shaun Murphy, of specialist advisors Portal Tax Claims tell me. “Most accountants simply can’t deal with it, or think they are doing it already when they’re not. There is an enormous under tapped resource out there.

“Effectively, our surveyors will do an onsite survey and identify all the inherent plant and machinery hidden which is usually taken for granted within the original purchase price. From there our accountants will create the accredited HMRC approved report for submission.”

Portal Tax Claims promises to manage every stage of a claim’s process and offers ‘a no claim no fee’ guarantee. They will look at the purchase price paid by a company for the property and in most cases say they’ll claim about 25% back, offset against the company’s tax bill.

A trade company, Portal Tax Claims doesn’t accept business from clients direct, but insists on an introduction from an advisor, and is currently turning over 200 claims a month – with the average introducer taking home £1,500 – “not bad for an introduction,” as Shaun puts it.     

Shaun believes the 96% not claiming is down to the complexities involved in a claim and the sheer lack of public awareness.

“Think about it, all those brokers out there, they can revisit all their old clients – at no cost to their clients – and they can say ‘whatever you’ve paid for the purchase price of a building, we can get about 25% back off that purchase price to offset against your current tax bill.

“What we do is we go back and unlock the hidden inherent value of the purchase price.”

Portal Tax Claims are so confident they will be able to make a substantial claim, they underwrite their offer: “If we can’t identify an additional £25,000 in unclaimed capital allowances, we will give you our report entirely free of charge. You won’t owe anyone a penny,” is stated on their website.

Quite a promise, and one they haven’t yet had to fulfil as so far, of the hundreds of claims managed, not a single one has been under £25,000.

Based in Rochester, the company has in excess of 300 agents across the country and is forecasting substantial company growth, “we’re aiming to bring our claims up to 500 a month, we’re growing exponentially,” explains Shaun.

Portal Tax Claims take 5% for their services – a percentage of the identified capital allowances – and allows for 15-20% for the introducer depending on their input.

The process takes an average of eight weeks to complete and six stages are involved. Introducers are notified by text message alerts every time a stage is complete, “we do our upmost to make sure the introducer is well informed and never left in the dark.”

All reports and all surveys are managed by Portal Tax Claims, and introducers are paid by automatic direct debit as soon as the rebate completes and Portal is paid.

There are five simple questions that must be answered before a claim should be made:

1. Did the property cost £150,000 or more? Answer must be Yes

2. Is the owner subject to UK tax? Answer must be Yes

4. Has the owner paid UK tax within the last two years OR likely to pay tax in the next 2 years? Answer must be Yes.

3. Is the property owned by a charity or pension fund? Answer must be No as charities and pension funds already have separate tax breaks.

5. Has the owner made a claim before against the actual purchase price of the building? Answer must be No.

Shaun describes the average claimant as being a limited commercial company, who is the owner-occupier of a property with an average purchase price of £600,000. On average, the firm finds £150,000 worth of capital assets, which are then used to reduce the company’s tax bill by £42,000 – provided they are a 28% corporation tax payer.

Aware that that for many brokers capital allowances is an area they are not too familiar with, the firm has spent a substantial amount of time on its website, which includes mini step-by-step video guides, power point presentations, pdfs providing FAQs, a Capital Allowance History guide – all of which are available to download for free.

 “We want out brokers to be informed, the education process is the hardest part about it, but we’re going to get there,” says Shaun smiling.

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