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Vol 24 No 5 May/June 2019

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Capital Allowances: Transactions and Planning 2019/20

ISBN13: 9781526511171
Previous Edition ISBN: 9781784512774
To be Published: July 2019
Publisher: Bloomsbury Professional
Country of Publication: UK
Format: Paperback
Price: £140.00

This book has been comprehensively updated to cover all recent developments in this complex area. This includes the rules introducing major changes in the law and practice for claiming capital allowances on property purchases. Failure to understand and deal with these rules will, in many cases, result in a complete loss of allowances for both buyers and sellers. Inevitably, negligent advisers will face a significant increase in complaints, fee disputes, legal action and consequent claims against PI insurance.

Key developments in this area as announced in the Finance (No. 3) Bill 2017-19 include:

New Structures and Buildings Allowance (SBA)

This will give tax relief at 2% a year for the cost of constructing commercial (non-residential) buildings and structures and will extend to buildings in the UK or overseas provided they are used for a trade, a profession or a property letting business, to the extent that the profits of the activity are subject to UK tax. Practitioners will need to understand what the definitions of 'commercial building' and 'de minimus' are, plus the transitional rules and how they apply.

Annual investment allowance (AIA) increase to £1 million:

The transitional arrangements associated with this change mean that practitioners will need to do complex calculations to work out available AIA, where chargeable periods straddle 1 January 2019, the date when thresholds change.

Abolition of some environmental enhanced capital allowances:

While ECAs were originally a welcome relief, they were hard to claim and with the AIA now increasing to £1m, ECAs will only be worth claiming if the total qualifying expenditure in a year is more than the AIA cap. Reduction in the special rate of plant and machinery allowances:

This has been reduced from 8-6%, largely to offset the upfront cost of introducing the SBA.

SSE Generation Limited v HMRC [2018] UKFTT 416 (TC):

Important case involving certain parts of CAA 2001 dealing with structures and buildings, bringing issue to the meaning of 'plant'.

This print edition also consolidates changes made via the previous two years' online updates, including restructuring of historical content and updated commentary on:

  • the abolition of the business premises renovation allowance from April 2017
  • analysis of key case law such as Senex Investments Ltd v HMRC [2015] UKFTT 0107 (TC) on business premises renovation allowances and Paul Telfer v HMRC [2016] UKFTT 614 (TC) on whether caravans could be classified as 'plant'. Legislation and case law:
  • FA 2017
  • F (No 2) A 2017
  • FA 2018
  • FA 2019
  • CAA 2001
  • Senex Investments Ltd v HMRC [2015] UKFTT 0107 (TC) on business premises renovation allowances
  • Paul Telfer v HMRC [2016] UKFTT 614 (TC) on whether caravans could be classified as 'plant'
  • SSE Generation Limited v HMRC [2018] UKFTT 416 (TC) on the definition of plant in cases dealing with structures and buildings

Chapter 1: Practicalities of a claim
Chapter 2: Construction of new buildings
Chapter 3: Purchase of a newly-constructed building
Chapter 4: Purchase of a second-hand building
Chapter 5: Offices – special features
Chapter 6: Retail property – special features
Chapter 7: Industrial property – special features
Chapter 8: Hotels – special features
Chapter 9: Enterprise zones
Chapter 10: Agricultural property – special features
Chapter 11: Property investors – specific issues
Chapter 12: Sale of property
Chapter 13: Acquisition of a business
Chapter 14: Plant: system of allowances
Chapter 15: Plant: the meaning of the term
Chapter 16: Plant: treatment of common items in buildings
Chapter 17: Vehicle fleet
Chapter 18: Leasing and hire-purchase
Chapter 19: Research and development, patents and know-how
Chapter 20: Transactions within groups and between connected persons
Chapter 21: Claiming and disclaiming allowances
Chapter 22: Interaction with other taxes
Chapter 23: International matters
Chapter 24: Contaminated land
Chapter 25: Goodwill and other intangible fixed assets
Appendix 1: Rates of allowances
Appendix 2: Examples of machinery and plant
Appendix 3: Location of Enterprise Zones
Appendix 4: Case summaries
Appendix 5: Pro forma elections
Appendix 6: Transaction checklists
Appendix 7: Typical amounts of allowances
Appendix 8: Pre-contract enquiries and warranties
Appendix 9: Comments on pre-contract enquiries