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Kerry Houston-Kypta Partner Coles Miller

New Rules For Capital Allowances On Commercial Property28th Mar 2014

by on 28th Mar 2014


commercial property solicitor Kerry Houston-KyptaCompanies and organisations buying or selling commercial property will need to comply with new capital allowance rules that may impact on the sale price and the negotiations, advise solicitors Coles Miller.

Failure to comply with the new regulations means that buyers risk losing forever the tax relief offered by capital allowances.

The new rules come into force on April 1 2014 for corporate tax payers and April 6 2014 for income tax payers.

They make it mandatory for vendor and purchaser to agree in advance the value of items that could qualify for capital allowances (known as the “fixed value requirement”). This rule was introduced in April 2012 where vendors had already claimed capital allowances.

In addition, the vendor must now ‘pool’ the capital allowances, which means adding them to the vendor’s account.

Not following these procedures means the opportunity to claim those tax allowances will be lost - not just to the purchaser but to any future buyers after that.

This could have an impact on the future re-sale value of the property where capital allowance expenditure has been high.

In situations where purchaser and vendor fail to agree, the value of the qualifying items will be determined by a tax tribunal.

Coles Miller commercial property solicitor Kerry Houston-Kypta said: “These new rules could potentially slow down the sale of commercial property because they may affect price negotiations and negotiations on fixing capital allowances values.

“It’s important for vendors and purchasers to take this into account and plan ahead and to discuss capital allowances at an early stage of any negotiations.

“Getting expert advice is absolutely essential. Capital allowances have always been complex - now they are even more so,” she added.

To avoid losing capital allowances, it is crucial that the sale is dealt with correctly by both parties’ solicitors and accountants.

Coles Miller has a specialist team of commercial property solicitors who carry out work across London and the south.

The Commercial Property department is led by Partner Carol Elliott whose clients include banks, large companies, developers, pension funds and charities.

Coles Miller has just expanded its commercial property team with the addition of newly qualified solicitor Katrina Eldridge.

Katrina joined Coles Miller in September 2012 and has been working within a number of departments at the firm.

Her specialisms include freehold and leasehold acquisitions and disposals and the negotiation and drafting of commercial leases.

Katrina also negotiates business and company sales and acquisitions, drafts shareholder agreements and registers trademarks.

Ms Elliott said: “Katrina’s appointment to the commercial property department further strengthens the department and is recognition for all her hard work.

“Her appointment highlights Coles Miller’s excellent track record of training solicitors and promoting from within,” she added.

Katrina said she particularly enjoyed dealing with commercial work because “it’s fast paced and we get to know our clients and their businesses. I am enjoying it immensely.”

She added: “We have many loyal clients. For example, if a client takes a lease for five years they tend to come back to us so we see a lot of repeat business.”

Coles Miller’s commercial law department is one of the largest in Dorset and assists clients across the South West and South East regions from the firm’s Poole branch.

For further information, contact Coles Miller solicitor Kerry Houston-Kypta, 01202 338893.

This document is not intended to constitute and should not be used as a substitute for legal advice on any specific matter. No liability for the accuracy of the content of this document, or the consequences of relying on it, is assumed by the author. If you seek further information, please contact Managing Partner Neil Andrews at Coles Miller Solicitors LLP.