Capital Allowances for Solicitors

When solicitors are involved in commercial property transactions, they often recognise the value of exploring potential capital allowances on behalf of their clients. By claiming tax allowances on qualifying capital expenditure, your client can reduce their taxable profits and benefit from a lower liability that can make their purchase more cost-effective and tax-efficient.  However, this requires you to understand a complicated financial position - or to work with an expert who does given the various different connotations makes dealing with capital allowances correctly an minefield.

At Monetta, we have partnered with many businesses involved in commercial property transactions through their solicitors, and we can offer bespoke advice on allowances and tax compliance to help your clients get the most from any transaction. As accountants with a wealth of expertise in capital allowances, you can rely on us to deliver a high-quality service on your behalf. We hope that by working towards the best outcomes for you and your client, we can develop a working partnership that will last into the future.

To learn more about Monetta's capital allowances service, or how we work with solicitors, surveyors and other accountants during high-value commercial transactions, contact us today. Call your local Monetta office or use our online enquiry form to request a call back.

How Monetta Can Help

Whether you are acting on behalf of the seller or buyer, there are capital allowances implications that may need to be addressed during a property transaction. Changes to the capital allowances legislation over the years have added layers of complexity which in turn means that one answer does not fit all transactions. Beginning with the Capital Allowances Act 1990, which was amended with new rules by the Finance Act 1997 and finally replaced by the Capital Allowances Act 2001 (CAA2001), the laws about who can claim capital allowances and when have changed significantly.

These layers of complexity are challenging, and getting it wrong could result in the right to claim capital allowances being lost, not only for the current purchaser but for all future owners. It is vital to work with experts who understand the intricacies of how these laws are applied.

For this reason, Monetta has developed a partner service through which we work with solicitors, surveyors and other accountants to offer tailored capital allowance advice. There are a number of situations where we are able to provide initial assistance, including:

• Setting out and reviewing capital allowances enquiries when buying or selling commercial property
• Providing the correct contractual clauses within a sale and purchase agreement
• Informing all parties of their obligations with respect to any mandatory pooling requirement
• Preparing a compliant CAA2001 section 198 election

Not only could our involvement save you time and effort, but it would also ensure that all complexities and nuances regarding capital allowances legislation are correctly addressed when buying or selling commercial property.

How We Have Assisted Solicitors

At Monetta, we have developed our partner service to make it easier for solicitors to maximise value on behalf of their clients. We recognise that, by delivering the best service for your clients and helping them to take advantage of all the relevant tax allowances, we leave every party satisfied with the arrangement. Thanks to our approach, we have developed long-standing relationships with many solicitors and work on all their commercial property transactions, whether they represent the seller or the new buyer. Some of our success stories can be found here:

Case Study: A Section 198 Election for a Buyer

We were contacted by a solicitor acting for the purchaser of an office building. The seller proposed a CAA2001 Section 198 (s198) election for £2. On reviewing the details, we managed to ascertain that the seller had owned the property for four years, having purchased it direct from a developer. The seller had claimed one years' worth of capital allowances, having just engaged a firm to undertake a review. In addition, the seller was an SPV and this was the only property held by the company.

We managed to negotiate with the seller and their solicitor that the most appropriate course of action would be a CAA2001 s198 election at the tax written down value (TWDV). The £2 figure was a standard default position used by the seller’s solicitor, which would have meant all remaining allowances were lost. The TWDV was worth just over £750,000. This was utilised, which led to tax relief of £187,500.

Case Study: Capital Allowances Advice for a Seller and a Buyer

A client who had purchased a property for £2m in around April 2005 and was now looking to sell it contacted us to assist with answering various capital allowances queries. We managed to ascertain that they did not claim any allowances and that they had purchased the property from a pension fund that had owned the property since 1994.

We managed to identify £550,000 of plant and machinery allowances. The seller had other property income and we therefore suggested they enter into a CAA2001 s198 election for £1 when selling the property. The buyer initially resisted and was reluctant to agree to the £1 election. However, we explained to them that they could claim the additional integral features, because they would be the first to incur expenditure since the introduction of this allowance. The integral features were a proportion of the £3.5m they were paying for the property and, as such, their claim came to £450,000.

Creating Lasting Partnerships

At Monetta, we believe in leveraging our commercial property expertise on behalf of any client for which capital allowances are a relevant consideration. We do not set a minimum project size as a threshold for working with us, because we know that our advice can support clients of all sizes and types. If it benefits your client, it will benefit you, and through this approach we aim to create lasting partnerships with law firms and solicitors throughout the UK. When instructed by you, we can:

• Provide an initial review of the correct capital allowances position, helping you to answer any CPSE enquires relating to capital allowances.
• Negotiate a CAA2001 s198 election figure.
• Prepare the correct CAA2001 s198 election in the event of a prior capital allowances claim.
• Provide contract wording for sale and purchase agreements to ensure the correct position for capital allowances is addressed.
• Deliver online or in-person CPD training.

Whatever support you need, Monetta's experts want to help. Contact us to learn more about partnering with us and what it could mean for a commercial property solicitor like you.

Why Choose Monetta?

At Monetta, our business accounting experts can provide tailored advice, whether on a specific aspect of a sale or throughout the process. Solicitors are involved in property acquisitions and disposals from the start of the process, and this also typically presents the first opportunity to ensure capital allowances are correctly addressed. As such, we recommend you contact us at the earliest opportunity if your client aims to claim capital allowances.

By identifying qualifying expenditure, considering the position of any capital contributions and taking advantage of all the available allowances, your clients can offset the purchase price of a new property against their taxable profits. We will conduct thorough reviews and prepare the claim on behalf of your client to make sure it meets HMRC requirements. This also helps us to identify all elements of qualifying expenditure and structure the financial aspects of a deal in an optimal way for tax purposes.

This can make buying commercial property significantly more cost-effective for your clients, which reflects well on solicitors, the Monetta team, and our partnership.

Get in Touch

If you represent a business in a property transaction and want to ensure capital allowances are claimed correctly, contact Monetta today. Call your local Monetta office, use our online enquiry form to request a call back, or visit our team page to find out more about our capital allowance experts.